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Venelar
LSU Fan
The AP
Member since Oct 2010
406 posts

Cash-out refi, best option for addition to house?

We are 2 years into a 15yr on our home. We owe 120k, and house appraised for 160 when we refi'd in 2010. We've always thought we'd wait (save and mostly pay cash) to add on, but with BO reelected and rates so low, I'm thinking it might be time to act now before they start climbing back up in a couple of years. (assuming).

Thinking an addition should run us around 30k. Is this our best option?

TIA

Edit: Current loan is 3.75%, 15yr. Pretty sure rates are even lower now.
This post was edited on 11/19 at 11:51 am



ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
7701 posts

re: Cash-out refi, best option for addition to house?
I know it's different strokes for different folks, but I would refi for 30 at 3.5, and do bi weekly or make one extra payment to knock 6 years off. That is exactly what I am doing.



ds1tiger
LSU Fan
Closer than you think
Member since Apr 2006
285 posts

re: Cash-out refi, best option for addition to house?
Max loan-to-value on a cash out refi is 80%. May have to do a line of credit/2nd mtg.


ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
7701 posts

re: Cash-out refi, best option for addition to house?
Very true. Should be close. Make sure you check comps

After two years you probably owe 117k-ish? You'll need to appraise 185k area to pull out 30.


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TheHiddenFlask
Clemson Fan
The Welsh red light district
Member since Jul 2008
17798 posts

re: Cash-out refi, best option for addition to house?
quote:

I know it's different strokes for different folks, but I would refi for 30 at 3.5, and do bi weekly or make one extra payment to knock 6 years off. That is exactly what I am doing.


Dumb. You are paying a higher rate so that you can prepay?

I was with you until the bi weekly part.


lsu tigerdog
LSU Fan
Baton Rouge
Member since Nov 2007
140 posts

re: Cash-out refi, best option for addition to house?
if you decide to do a refi and take cash out, on the bank side, you'll get hit on the rate because of adjustment due to being a cash out loan, max loan to value will be 85%,that is conventional and fha product.
15 yr term as low as 2.875%
i suggest line of credit
if you have questions, call me 225.291.7901 x 224


foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
32193 posts

re: Cash-out refi, best option for addition to house?
quote:

bi weekly or make one extra payment to knock 6 years off. That is exactly what I am doing.


You are willingly paying extra money to prepay a loan at that low a rate? Once you take the loss of tax deduction and inflation into account, that is about a zero return on investment. You are literally locking up money for 20+ years for no return at all.

Back when rates were higher this made more sense but not now.


Venelar
LSU Fan
The AP
Member since Oct 2010
406 posts

re: Cash-out refi, best option for addition to house?
Yeah no matter what we do it'll be a 15year. The house is the only debt we have (and will stay that way) and with a 1yr old and planning for #2 our goal is to be out of the house when they finish high school.

Thanks for the tips


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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
7701 posts

re: Cash-out refi, best option for addition to house?
Dumb. You are paying a higher rate so that you can prepay?

I was with you until the bi weekly part.

Trust me, it's dumb as shit, but its something my wife was steadfast on. She wants house to be paid before retiring, that makes sense to her brain. It's 1900.00 a year. I get full reign of all other finances for 1900.00 a year. It's a f-ing bargain.


foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
32193 posts

re: Cash-out refi, best option for addition to house?
quote:

Trust me, it's dumb as shit, but its something my wife was steadfast on. She wants house to be paid before retiring, that makes sense to her brain.


Yes it is dumb, but marital harmony is pretty important.


ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
7701 posts

re: Cash-out refi, best option for addition to house?


And we agreed to make one lump sum payment at end of year, which means I can still after x-mas say, "honey, we're really getting killed, lets put off that payment for another 6 months.

Psycha-ma-cology-ism


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Venelar
LSU Fan
The AP
Member since Oct 2010
406 posts

re: Cash-out refi, best option for addition to house?
@LSU tigerdog

You have a voicemail


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