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Cash Out Refi or HELOC
Posted on 7/10/20 at 12:28 pm
Posted on 7/10/20 at 12:28 pm
I'm considering building a detached garage with bonus room/future efficiency apartment above.
Current mortgage originated in 2016. 30year fixed, 3.5%
House should appraise for 380K (conservatively)
Currently owe 260K
I have a current HELOC available up to 44K.
I've not really used the heloc for anything, and I'm a little leery of what payments would be on 40K...seems like i would just end up refi-ing into a reg mortgage anyway....
Thoughts/suggestions?
Current mortgage originated in 2016. 30year fixed, 3.5%
House should appraise for 380K (conservatively)
Currently owe 260K
I have a current HELOC available up to 44K.
I've not really used the heloc for anything, and I'm a little leery of what payments would be on 40K...seems like i would just end up refi-ing into a reg mortgage anyway....
Thoughts/suggestions?
4
Posted on 7/10/20 at 12:40 pm to AUjim
if you can pay the HELOC off in 5yrs take the HELOC if you can't refinance.
HELOCS have an adjustable rate and are on a 15yr schedule so stretching it out past 5 years becomes risky with rates moving up.
HELOCS have an adjustable rate and are on a 15yr schedule so stretching it out past 5 years becomes risky with rates moving up.
Posted on 7/10/20 at 12:54 pm to AUjim
Neither FNMA homestyle renovation loan if all your looking to do is do a renovation. You will get market rate/term refinance rates. You'll lower the rate and get to be able to finance the renovations.
Posted on 7/10/20 at 2:32 pm to AUjim
I'd use the heloc.
Rates arent going to move in 5 years. Most offer interest only. But being a money talk poster, you want to pay the sucker off. Having it isolated on the heloc allows you to do that.
Doing a cash out refinance isnt going to get you the best terms in the marketplace. Even if it is a home improvement mortgage.
Best terms go to rate/term refinance. And best terms are typically under 75% loan to value.
If you really want to get a better mortgage, go ahead and do a rate/term refinance on your first. Either subrogate the heloc or close it and open a new one.
After the refinance, use the heloc for the renovation.
That gets you the best of everything.
Rates arent going to move in 5 years. Most offer interest only. But being a money talk poster, you want to pay the sucker off. Having it isolated on the heloc allows you to do that.
Doing a cash out refinance isnt going to get you the best terms in the marketplace. Even if it is a home improvement mortgage.
Best terms go to rate/term refinance. And best terms are typically under 75% loan to value.
If you really want to get a better mortgage, go ahead and do a rate/term refinance on your first. Either subrogate the heloc or close it and open a new one.
After the refinance, use the heloc for the renovation.
That gets you the best of everything.
Posted on 11/9/20 at 12:14 pm to AUjim
Jim, what did you end up going with and what was the total cost on your addition, if you don't mind me asking? Looking at a similar situation with adding a detached 3-car garage, closing in our existing garage (adding ~575sqft), and adding a patio.
Looking at a Cash Out Refi most likely but was curious.
Looking at a Cash Out Refi most likely but was curious.
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