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Venelar 
LSU Fan
The AP
Member since Oct 2010
139 posts
| Cash-out refi, best option for addition to house? (Posted on 11/19/12 at 11:49 am)
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
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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
4598 posts
 Online
| re: Cash-out refi, best option for addition to house? (Posted on 11/19/12 at 11:56 am to Venelar)
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.
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ds1tiger
LSU Fan
Closer than you think
Member since Apr 2006
203 posts
| re: Cash-out refi, best option for addition to house? (Posted on 11/19/12 at 12:31 pm to Venelar)
Max loan-to-value on a cash out refi is 80%. May have to do a line of credit/2nd mtg.
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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
4598 posts
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| re: Cash-out refi, best option for addition to house? (Posted on 11/19/12 at 12:39 pm to ds1tiger)
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
16383 posts
| re: Cash-out refi, best option for addition to house? (Posted on 11/19/12 at 12:40 pm to ItNeverRains)
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.
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lsu tigerdog
LSU Fan
Baton Rouge
Member since Nov 2007
92 posts
| re: Cash-out refi, best option for addition to house? (Posted on 11/19/12 at 1:16 pm to Venelar)
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 
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foshizzle
LSU Fan
Member since Mar 2008
25118 posts
| re: Cash-out refi, best option for addition to house? (Posted on 11/19/12 at 2:47 pm to ItNeverRains)
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.
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Venelar
LSU Fan
The AP
Member since Oct 2010
139 posts
| re: Cash-out refi, best option for addition to house? (Posted on 11/19/12 at 3:56 pm to foshizzle)
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
4598 posts
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| re: Cash-out refi, best option for addition to house? (Posted on 11/19/12 at 4:15 pm to TheHiddenFlask)
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.
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foshizzle
LSU Fan
Member since Mar 2008
25118 posts
| re: Cash-out refi, best option for addition to house? (Posted on 11/19/12 at 5:47 pm to ItNeverRains)
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.
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ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
4598 posts
Online
| re: Cash-out refi, best option for addition to house? (Posted on 11/20/12 at 6:56 am to foshizzle)
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
139 posts
| re: Cash-out refi, best option for addition to house? (Posted on 11/20/12 at 4:01 pm to lsu tigerdog)
@LSU tigerdog
You have a voicemail
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