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Started By
Message
Refi question
Posted on 7/6/14 at 8:50 am
Posted on 7/6/14 at 8:50 am
Our home has increased over 50% in value since we first bought it 3 years ago. (Mid-city is EXPLODING)
We are going to refi to lock in a lower interest rate. Our present amount owed is 75% of the original sale price but only 50% of the home's present approximate value.
My first instinct is to refi with the same amount of money borrowed (perhaps minus closing so the whole thing cost zero dollars today)
Is there a good reason to try and pull more money out of the deal and sock it away in conservative fund (50% bond/50% stock)? The revenue from the fund should almost certainly cover the extra expense and payments - but we'd have the principal sitting around in case we ever needed more cash. My thinking is if we needed to get a loan 10 years down the road our house may have decreased in value by then and/or interest rates may be higher - so best to take it out now maybe?
We are going to refi to lock in a lower interest rate. Our present amount owed is 75% of the original sale price but only 50% of the home's present approximate value.
My first instinct is to refi with the same amount of money borrowed (perhaps minus closing so the whole thing cost zero dollars today)
Is there a good reason to try and pull more money out of the deal and sock it away in conservative fund (50% bond/50% stock)? The revenue from the fund should almost certainly cover the extra expense and payments - but we'd have the principal sitting around in case we ever needed more cash. My thinking is if we needed to get a loan 10 years down the road our house may have decreased in value by then and/or interest rates may be higher - so best to take it out now maybe?
This post was edited on 7/6/14 at 8:52 am
10
Posted on 7/6/14 at 8:51 am to SpidermanTUba
Money talk board
Don't take out more than you need unless you are going to use it on something like home improvements right away or a new car (assuming the interest rate on home is less than that for car)
Don't take out more than you need unless you are going to use it on something like home improvements right away or a new car (assuming the interest rate on home is less than that for car)
This post was edited on 7/6/14 at 8:52 am
Posted on 7/6/14 at 8:54 am to SpidermanTUba
quote:
Is there a good reason to try and pull more money out of the deal and sock it away in conservative fund (50% bond/50% stock)?
It depends on your rate. For example if you can get a fixed 3.5% rate, which is tax deductible, and you can earn at least that in something conservative why wouldn't you?
quote:
My first instinct is to refi with the same amount of money borrowed
BTW this is gonna be almost NOTHING if you just bought it 3 years ago.....probably only a few grand since your first few years are almost all interest.
This post was edited on 7/6/14 at 8:56 am
Posted on 7/6/14 at 8:56 am to SpidermanTUba
You should feel bad. You didn't earn that wealth. You should cash out the equity and give it to poor people.
Posted on 7/6/14 at 9:03 am to dinner roll
quote:
You should feel bad. You didn't earn that wealth. You should cash out the equity and give it to poor people
It's sad that some people believe that.
Posted on 7/6/14 at 9:05 am to SpidermanTUba
Hey fatty, shouldn't someone with a 188 IQ not need to ask these questions?
Posted on 7/6/14 at 9:11 am to lsu480
quote:
BTW this is gonna be almost NOTHING if you just bought it 3 years ago.....probably only a few grand since your first few years are almost all interest.
We've paid down 4.5% of the original loan amount. So yeah its not a whole lot.
Posted on 7/6/14 at 9:12 am to dinner roll
quote:
You should feel bad. You didn't earn that wealth.
Why should I feel bad for getting lucky in the market?
quote:
You should cash out the equity and give it to poor people.
You first.
Posted on 7/6/14 at 9:12 am to Me4Heisman
quote:
Hey fatty, shouldn't someone with a 188 IQ not need to ask these questions?
I dunno, you tell me.
Posted on 7/6/14 at 9:58 am to SpidermanTUba
So if you cash out and neg am yourself are you going to make the mistake of getting back into a 30yr fix?
Posted on 7/6/14 at 10:16 am to SpidermanTUba
How much better are the rates? I don't see how it could be beneficial to refi unless the rate is significantly lower? Did you get screwed on the rate the first time? The house appreciating in value has nothing to do with it unless you are paying PMI ( which you could probably get taken off with a new appraisal) or if you wanted cash out.
Posted on 7/6/14 at 10:18 am to CorkSoaker
quote:
or a new car (assuming the interest rate on home is less than that for car)
And basically having a car on a 30 year note......no thank you
Posted on 7/6/14 at 10:19 am to SpidermanTUba
quote:
Is there a good reason to try and pull more money out of the deal and sock it away in conservative fund (50% bond/50% stock)
I would never borrow money to invest with, I feel it would be better to dedicate the increase in the monthly note that it would take to cash out and invest that monthly
Posted on 7/6/14 at 10:24 am to SpidermanTUba
If its the cash you want sell the house now. This area is likely peaking-
I also would rethink living in this area for the next 10 years
Just Sayin- there are other things to consider
I also would rethink living in this area for the next 10 years
Just Sayin- there are other things to consider
Posted on 7/6/14 at 11:35 am to SDVTiger
quote:
So if you cash out and neg am yourself are you going to make the mistake of getting back into a 30yr fix?
Of course. Why wouldn't I want these rates to last as long as possible?
Though I was actually considering the possibility of throwing MORE money into it so we can afford a 15 year loan. The rate difference is absurd.
The main reason we are doing the refi is to lock in lower interest - I missed my chance a little while back and I'm not gonna make the same mistake this time.
Posted on 7/6/14 at 11:37 am to SpidermanTUba
What is the difference in the rates?
And how long do you plan on living in this house ?
And how long do you plan on living in this house ?
This post was edited on 7/6/14 at 11:39 am
Posted on 7/6/14 at 11:38 am to Tigerpaw123
quote:
How much better are the rates? I don't see how it could be beneficial to refi unless the rate is significantly lower? Did you get screwed on the rate the first time?
Our rate was about 0.15% higher than the regional average for that week. I don't have good number on local rates - for all I know they just jack up the rates for people in New Orleans and the broker didn't screw us in particular.
There is an equation that can be used to determine when a refi makes sense (LINK ) and I figured it out a while back that ~4.2% was about what we would need to get.
Posted on 7/6/14 at 11:39 am to Tigerpaw123
quote:
What is the difference in the rates?
~0.65%.
quote:
And how long do you plan on living in this house ?
I would place our mean expected length of stay at 10 years. Though we are planning to say forever, job realities may force us out in 3-4 years time. So that figures into the average and brings forever down to 10 years.
This post was edited on 7/6/14 at 11:40 am
Posted on 7/6/14 at 11:40 am to SpidermanTUba
quote:
~0.65%.
Do not see how such little change in rate would be worth it????
Posted on 7/6/14 at 11:44 am to Tigerpaw123
quote:
Do not see how such little change in rate would be worth it????
It works out to like 20k over the life of the loan.
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