How does an umbrella loan work?

Asked by Brandon Lee Grendze, Norfolk, VA Mon Feb 6, 2012

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Elliott R. O…, Agent, McLean, VA
Mon Feb 6, 2012
Umbrella loan is just another name for a debt consolidation loan that is secured by your home. Also called a cash-out refi.

Let's say you own a house worth $300,000 and owe $100,000 so you have just over 66% equity.

You have $10,000 in credit card debt at 19%
Car loan $15,000 at 8%
unsecured loan of $10,000 at 11%.

So the new loan pays of your current mortgage plus the additional outstanding consumer debt for a total of $135,000 . There are closing costs and pre-paid taxes and insurance that have to be taken care of at closing but those can usually all be rolled in to the new loan amount.

Keep in mind, this new loan would be in the mid to low 4's as opposed to the higher rates you were paying to your various creditors.

Obviously there is a lot more to it than that so for more questions or details please contact me at your convenience.

Elliott R. Oliva
NMLS #353884
Mortgage Banker
Primary Residential Mortgage, Inc.
202-681-1636 direct
"Se habla Espanol"
1 vote
Joe McAvoy, Agent, Newport News, VA
Mon Feb 6, 2012
Hello Brandon,

The link below will take you to an eHOW article with a good summary of how an umbrella loan works. A few helpful reference links follow at the bottom of the article.

I can recommend a few experienced and reputable lenders for you to inquire upon further. The link below takes you to my Trulia profile outlining my professional services. I look forward to serving you in this important endeavor. Feel free to call me any time with questions or service requests. My mobile number is 268-5123.

All the best, Joe McAvoy
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