One Bank Says Go For A Home Equity Loan Another Says A

Q: I own a 4 unit place and live in one, rest are rented. Owe about $60,000 on it. Valued at 150,000. I want to get $80,000 to pay off a high interest rate loan and have some bucks to pay bills off. One bank says go for a home equity loan another says a refi is better. What gives?

A: I have been through a similar issue. My home appraises at $165000, and I have a $70000 15 year first loan at 7%. I could refi, and get a 120,000 30 yr 6.8% loan and pay $3000.00 in points and fees (is this tax deductible methinks a refi does not count?) or take out a 8.5% equity line. Now looking at the math 70,000 15yr 7% 1st - $714.00 /mth (ends in July 2010) 50,000 equity 8.5% - $354.00 /mth (bal in July 2010 $50000.00) 120,000 30yr 6.8% 1st - $774.00/mth (bal in July 2010 $98150.00) So doesnt take much to figure I should go for the refi. Actually I decided on the equity line. Convenience was the whole reason. I made the phone call at 12:00pm and at 3:00pm I was cleared for a $50,000.00 equity line (although that is not the whole story as I have to sign papers and wait for the loan to fund - approx 7 days). Now I have heard of folk getting home loans in 7 days, but my experience is 2 - 3 weeks, and some real nailbiting and record checking to get the job done. Also I figure there is a good chance I will sell my home in the next year or two, and

I was given an introductory teaser rate of 5.25% for the first 10 months and I just love not having to write any checks to get this accomplished. I have been playing with these figures all day to really see if I have gone soft in the head. If your place is worth 150,000.00 much easier to get loans if only go to 80% LTV ($120,000.00). Once you go over this will have to pay PMI ($50/mth) have to deal with an impound account, or go to a higher interest portfolio loan. You can get conventional FMAC loans on a 4 unit property, but they will only use 75% of the rents for your monthly income calculation. Now does anyone know whether interest paid on an equity line is tax deductible.