Home Refi or Sec Mortgage?

7 Replies

Hi all!  Great forum and I hope to learn a lot hanging around!  My situation - I own my own home in NY free & clear with no outstanding debts.  Credit score is north of 800 as well so we're doing ok.  My daughter, a single mom, needs a little help so I'm looking to help her get into a small condo for the time being.  She can't get a note so I can either take equity out of my place or get an "investment property" type mortgage and let her pay the rent to cover the payments.  My question surrounds which loan route is best?  With the refi, the won't be points so it's probably cheaper and quicker but are there pro's to going the other way (tax benefits, etc) or is this an easy answer?  Any thoughts, comments, suggestions or recommendations would be most appreciated from this new investor!!  Thanks!

@Bill Patrick

how about a HELOC? Ask around especially the local banks or credit unions. They don't usually have closing costs.

Or ask the bank you have accounts with. Leverage your relationships with them 

Hi @Bill Patrick ,

Please don't take this question the wrong way, it pertains to a niche mortgage guideline that not a lot of people are aware of that might benefit you.

Is your daughter "physically handicapped or developmentally disabled" in any way, shape, or form?

I suggest: just go with the cheapest way you can find after asking around. Either way, your own home will lose a chunk of its equity, and, your investment expenses should be as tax deductible.

@Chris Mason Actually my daughter has been diagnosed with a learning disability but there's no physical disability. How would that come into play?

I will check into the HELOC as well.

Thanks for the discussion, folks. I knew I'd get some good suggestions here!

Originally posted by @Bill Patrick :

@Chris Mason Actually my daughter has been diagnosed with a learning disability but there's no physical disability. How would that come into play?

 From FannieMae.com:

Parents or legal guardian wanting to provide housing for their physically handicapped or developmentally disabled adult child ---> If the child is unable to work or does not have sufficient income to qualify for a mortgage on his or her own, the parent or legal guardian is considered the owner/occupant.

That means 95% LTV is available, and the same interest rate pricing you'd get if you were going to live there yourself. Pick up the phone and start calling lenders licensed to do business in your state until you find someone familiar with this.

Back to your original question, you could take a HELOC on your primary out for a 20% down payment, if you want to avoid PMI.

@Chris Mason Very interesting, Chris. I'll definitely take a look into that. As you can tell, this is much more of a "helping the family out" effort than an "investment or for profit" effort so I very much appreciate the suggestion to check it out. 

Happy to help, @Bill Patrick . Sweetheart deals for family, there's almost always some angle you can work on the mortgage side of things to get a better deal than what you'd get on a vanilla open market transaction. 

Lurkers: for any parent/child sweetheart deal, go ahead and assume there's some awesome angle to work on the mortgage front, and don't stop searching until you find it. It took a little spidey sense on my part, and one question, to find that angle for Bill, but there will be an angle for you too.

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