Any better way to get a second mortgage than Discover’s 7.5% loan?

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Topic Author
Starbase
Posts: 171
Joined: Sun Aug 14, 2022 10:25 pm

Any better way to get a second mortgage than Discover’s 7.5% loan?

Post by Starbase »

I need to get a second mortgage and of course the rates are pretty high.
I was able to get a quote from Discover for 7.5%. My place is a condo so my current mortgage provider won’t even offer me a second mortgage.
exodusNH
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Joined: Wed Jan 06, 2021 7:21 pm

Re: Any better way to get a second mortgage than Discover’s 7.5% loan?

Post by exodusNH »

Starbase wrote: Wed May 31, 2023 9:46 am I need to get a second mortgage and of course the rates are pretty high.
I was able to get a quote from Discover for 7.5%. My place is a condo so my current mortgage provider won’t even offer me a second mortgage.
Are you looking for a HELOC or a home equity loan? How long do you need the money?
lakpr
Posts: 11612
Joined: Fri Mar 18, 2011 9:59 am

Re: Any better way to get a second mortgage than Discover’s 7.5% loan?

Post by lakpr »

To answer your question, DCU is offering 6.63% fixed rate Home Equity Loans: https://www.dcu.org/borrow/mortgage-loa ... loans.html

You can become a member by donating to a charity they support: https://www.dcu.org/membership/member-eligibility.html
Look for the string "You may join this organization when you open your DCU membership" to quickly scroll to the list of eligible charitable organizations.

[Unsolicited Advice]: If this is about buying out your ex, from your other thread titled "Divorce Lien" -- Please reconsider simply selling the home instead of getting into complications.
moneytree
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Joined: Thu Mar 07, 2019 8:10 am

Re: Any better way to get a second mortgage than Discover’s 7.5% loan?

Post by moneytree »

SPX box spreads are about 400-425 bps currently.
Topic Author
Starbase
Posts: 171
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Re: Any better way to get a second mortgage than Discover’s 7.5% loan?

Post by Starbase »

exodusNH wrote: Wed May 31, 2023 10:44 am
Starbase wrote: Wed May 31, 2023 9:46 am I need to get a second mortgage and of course the rates are pretty high.
I was able to get a quote from Discover for 7.5%. My place is a condo so my current mortgage provider won’t even offer me a second mortgage.
Are you looking for a HELOC or a home equity loan? How long do you need the money?
I need about 200-300k which I will have to pay off over 20-30 years
exodusNH
Posts: 10347
Joined: Wed Jan 06, 2021 7:21 pm

Re: Any better way to get a second mortgage than Discover’s 7.5% loan?

Post by exodusNH »

Starbase wrote: Wed May 31, 2023 11:17 am
exodusNH wrote: Wed May 31, 2023 10:44 am
Starbase wrote: Wed May 31, 2023 9:46 am I need to get a second mortgage and of course the rates are pretty high.
I was able to get a quote from Discover for 7.5%. My place is a condo so my current mortgage provider won’t even offer me a second mortgage.
Are you looking for a HELOC or a home equity loan? How long do you need the money?
I need about 200-300k which I will have to pay off over 20-30 years
You'll need a home equity loan, then. 7.5% sounds about right since it's going to be junior to your primary.

Note that having the secondary loan will complicate refinancing the primary loan, since they'll need to agree to be subordinated.
Topic Author
Starbase
Posts: 171
Joined: Sun Aug 14, 2022 10:25 pm

Re: Any better way to get a second mortgage than Discover’s 7.5% loan?

Post by Starbase »

exodusNH wrote: Wed May 31, 2023 11:36 am
Starbase wrote: Wed May 31, 2023 11:17 am
exodusNH wrote: Wed May 31, 2023 10:44 am
Starbase wrote: Wed May 31, 2023 9:46 am I need to get a second mortgage and of course the rates are pretty high.
I was able to get a quote from Discover for 7.5%. My place is a condo so my current mortgage provider won’t even offer me a second mortgage.
Are you looking for a HELOC or a home equity loan? How long do you need the money?
I need about 200-300k which I will have to pay off over 20-30 years
You'll need a home equity loan, then. 7.5% sounds about right since it's going to be junior to your primary.

Note that having the secondary loan will complicate refinancing the primary loan, since they'll need to agree to be subordinated.
That’s good to know but my primary is at 2.35% so I’ll never refinance it
Topic Author
Starbase
Posts: 171
Joined: Sun Aug 14, 2022 10:25 pm

Re: Any better way to get a second mortgage than Discover’s 7.5% loan?

Post by Starbase »

lakpr wrote: Wed May 31, 2023 10:57 am To answer your question, DCU is offering 6.63% fixed rate Home Equity Loans: https://www.dcu.org/borrow/mortgage-loa ... loans.html

You can become a member by donating to a charity they support: https://www.dcu.org/membership/member-eligibility.html
Look for the string "You may join this organization when you open your DCU membership" to quickly scroll to the list of eligible charitable organizations.

[Unsolicited Advice]: If this is about buying out your ex, from your other thread titled "Divorce Lien" -- Please reconsider simply selling the home instead of getting into complications.
Yes it is to buy out my ex. My parents were going to lend me the money originally but then they changed their mind.
Topic Author
Starbase
Posts: 171
Joined: Sun Aug 14, 2022 10:25 pm

Re: Any better way to get a second mortgage than Discover’s 7.5% loan?

Post by Starbase »

lakpr wrote: Wed May 31, 2023 10:57 am To answer your question, DCU is offering 6.63% fixed rate Home Equity Loans: https://www.dcu.org/borrow/mortgage-loa ... loans.html

You can become a member by donating to a charity they support: https://www.dcu.org/membership/member-eligibility.html
Look for the string "You may join this organization when you open your DCU membership" to quickly scroll to the list of eligible charitable organizations.

[Unsolicited Advice]: If this is about buying out your ex, from your other thread titled "Divorce Lien" -- Please reconsider simply selling the home instead of getting into complications.
Thanks for sending DCU this. It seems they are for short durations, I would probably need 30 years
lakpr
Posts: 11612
Joined: Fri Mar 18, 2011 9:59 am

Re: Any better way to get a second mortgage than Discover’s 7.5% loan?

Post by lakpr »

Starbase wrote: Sat Jun 03, 2023 10:07 pm Thanks for sending DCU this. It seems they are for short durations, I would probably need 30 years
I did some research regarding long term Home Equity Loans, I wasn't able to find anything better than 7.5%. If you do have the offer in hand from Discover, perhaps take it, and then pay it down like crazy. To the extent that I'd even advocate holding off your 401(k) contributions (except to gather full match). That 7.5% you would pay is after-tax, since second mortgages must be used to improve the home in order to be tax deductible, which is not the case here. A 7.5% after-tax return while being in a 24% Federal tax bracket would mean right about 10% before-tax.

Now we are talking stock-market like returns by paying down the HELOC.

Edit: I just read in your past thread that you are in FL, and that your annual income is above $200k. That would put you, as a single, into the 32% tax bracket, therefore the 7.5% after-tax return is equivalent to 11% before tax earning rate. Now my eyes start popping up!
Topic Author
Starbase
Posts: 171
Joined: Sun Aug 14, 2022 10:25 pm

Re: Any better way to get a second mortgage than Discover’s 7.5% loan?

Post by Starbase »

lakpr wrote: Sat Jun 03, 2023 10:36 pm
Starbase wrote: Sat Jun 03, 2023 10:07 pm Thanks for sending DCU this. It seems they are for short durations, I would probably need 30 years
I did some research regarding long term Home Equity Loans, I wasn't able to find anything better than 7.5%. If you do have the offer in hand from Discover, perhaps take it, and then pay it down like crazy. To the extent that I'd even advocate holding off your 401(k) contributions (except to gather full match). That 7.5% you would pay is after-tax, since second mortgages must be used to improve the home in order to be tax deductible, which is not the case here. A 7.5% after-tax return while being in a 24% Federal tax bracket would mean right about 10% before-tax.

Now we are talking stock-market like returns by paying down the HELOC.

Edit: I just read in your past thread that you are in FL, and that your annual income is above $200k. That would put you, as a single, into the 32% tax bracket, therefore the 7.5% after-tax return is equivalent to 11% before tax earning rate. Now my eyes start popping up!
I will actually be able to file as head of household since my son is a full time college student and under 24. But yeah it's nuts.
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