View Full Version : Refinance opinions needed
Mr Spooky
05-20-2016, 12:26
I am about to start the refinance process on my house and wondering some opinions on how much equity to take out. We have a little over 100k in equity in the house to take out. Part of me says take it all out while the home prices are high, but on the other hand if the prices take a dump then we can be upside down.
We can afford the payment to take the full equity out, and we are only 4 years into our current original loan.
What do you all think? Any advise?
thanks
My advice is to not take anything out. Streamline refinance for the lower interest rate and lower monthly payments (by starting over at 30 years with a lower rate and a lower principle). Why are you considering taking out any equity at all?
Mr Spooky
05-20-2016, 12:43
To drop the PMI and was planning on getting the bathroom out of the 60s.
newracer
05-20-2016, 12:49
Take out what you need to make the improvements and pay off any other debt that is at a higher interest rate.
And maybe a little more to buy a cool firearm.
Paying off higher intrest debt is an option, but you'd be paying on that option for the next 30 years, which will probably not end up the better scenario in the end. Same with the bathroom.
Call your mortgage first, Citi was able to remove PMI for me with only an appraisal. Kept the same terms, no refi, etc.
How can you get rid of the PMI if you take out a loan on the entire appraised value? Won't that put you right back at 98/2 ratio and keep the PMI on the loan? Plus, since the loan amount is higher, the PMI would go way up. Not to mention your base payment would go way up as well. If you can afford all that extra payment, then you should be paying for the bathroom remodel in cash anyway.
newracer
05-20-2016, 13:09
Paying off higher intrest debt is an option, but you'd be paying on that option for the next 30 years, which will probably not end up the better scenario in the end. Same with the bathroom.
Unless you continue to make the same payment towards the debt.
I guess it depends on the higher interest debt and what he is realistically able to pay to get them paid. Also on whether he even has other debt, since we just assumed he does. :p
newracer
05-20-2016, 13:45
I recently refinanced my house to get a lower interest rate and pay off some debt. The company I used wanted me to take enough to pay off a car loan I have. The car loan is a lower rate than my mortgage and of course a shorter term. The guy was kind of surprised that I questioned it and told him no to that portion.
Trigger Time 23
05-20-2016, 13:57
I personally am a believer in paying off debt, including a mortgage. I would not take equity out. Just my opinion.
I recently refinanced my house to get a lower interest rate and pay off some debt. The company I used wanted me to take enough to pay off a car loan I have. The car loan is a lower rate than my mortgage and of course a shorter term. The guy was kind of surprised that I questioned it and told him no to that portion.
Well done, I would have laughed in his face. I recently applied for a HELOC and the lady went on and on about how great they are and how she uses hers to finance trips to Vegas for her and her friend so they can get good rates on flights and hotels when deals pop up. The whole time I sat there thinking about how stupid out is to use a HELOC in that way.
fportmen45
05-20-2016, 15:11
I've always been of the mindset to not use a house as a credit card, but that's just me.
Call Mortgage Solutions Financial. Talk to them about your options. They'll be happy to run all the numbers for you.
Jefe's AR
05-20-2016, 16:33
Don't take any out. Refinance at 15 years (you should be able to do this if you can take $100K out + current for 30 years). You'll pay less in interest in both the APR and over the life of the loan. (this should be really obvious though). Do the bathroom out of pocket.
You asked for advice, that is mine. *If there's a need, you can take a line of equity credit on the $100K you left. Find an online amortization schedule and plug in the numbers and see how much you'll save.
*I don't recommend this but it's an option. It should be short term as well.
I'm a big fan of having a 30-year loan, and just paying it like it's a 15-year. If you ever run into money issues, you can come up with an extra $500- $1,000 out of your monthly budget instantly without worrying about making the mortgage payment.
hurley842002
05-20-2016, 18:45
I'm a big fan of having a 30-year loan, and just paying it like it's a 15-year. If you ever run into money issues, you can come up with an extra $500- $1,000 out of your monthly budget instantly without worrying about making the mortgage payment.
Hell of a plan, when I'm ready to buy, this will probably be my plan.
Mr Spooky
05-20-2016, 19:56
Thanks for all the insight. The wife and I just started discussing it. We do have a little credit card debt, about 4K on a 9% apr card (vet bill). All cars are paid off too. Was just thinking if we could refinance and drop the PMI and take out some extra to pay off the card and get the bathroom done and pay what we are paying now, might be worth it.
again thanks for all the input, very helpful.
Before you take out a loan to pay off the debt, see if you have another card that will let you do a balance transfer at 0% interest for 12-15 months. The transfer fee is usually 4-5% ($300-$450), but then you can really knock out that debt over the next year as you're paying all principle and you'll be motivated by the dead line. If you can't quite get it paid before the deadline, transfer the remaining balance to another card to avoid the interest. This ONLY works if you're not actively using the card you transfer, and you have should stop using all your other credit cards as well.
Jefe's AR
05-21-2016, 08:55
I'm a big fan of having a 30-year loan, and just paying it like it's a 15-year. If you ever run into money issues, you can come up with an extra $500- $1,000 out of your monthly budget instantly without worrying about making the mortgage payment.
I agree. But, you must be very disciplined about doing it. And most won't. My wife tried to logic me with that when we refinanced several years ago. I convinced her that 15 year was our best option as it would force us to pay. On the flip side, our interest rate, 3%, actually lowered our new 15 year payment to just slightly less than the 30 year we had previous. There's always the option to take a equity line of credit.
Plug in your numbers here and see how much a difference your all in costs really are.
http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx
Better yet, find a calculator that shows how much interest you're actually paying on a 30 the first 5-10 years. Add in the fact that a 15 is usually offered at a lower % rate for the same borrower and it just makes sense to me.
You definitely have to WANT to make bigger payments on your loan in order for what I do to work. Once you get used to the big payment, it is no longer an issue because you've just accepted that your mortgage payment is that amount each month. I also pay bills on payday. I try to get as much money out of my bank account and where it belongs (debt payment, savings, investments, etc) as soon as possible, because it prevents me from spending it on beer and trinkets. With paying larger mortgage payments, I split up the payments. If you're trying to pay $1,200 a month, every paycheck you put $600 into your savings, then when the payment is due the money is there without the full $1,200 coming from one check. Makes it much easier to swallow.
If you're disciplined enough to use the credit card debt switching you might be able to pull off not paying a transfer fee. Sometimes you can call the new company and negotiate the fee down or spend 4k of your normal bills on the new card during the interest free period and pay off the old card.
I agree with the 15 year route if you can swing it, it should save your between .5 and .8 in your rate as well. A HELOC isn't a bad idea either, we got one on this house but aren't planning on pulling any $$$ from it unless needed.
Grant H.
05-21-2016, 16:59
If you're disciplined enough to use the credit card debt switching you might be able to pull off not paying a transfer fee. Sometimes you can call the new company and negotiate the fee down or spend 4k of your normal bills on the new card during the interest free period and pay off the old card.
I have used the method you described in the past, and it actually made me a little money (credit card points/incentives). Balance transfers almost never qualify for the rewards on CC's.
Saying that, don't get suckered into CC's because of their rewards. If you can benefit from them, while using the card responsibly, fine. But if not, don't even worry about the rewards.
One guy I worked with in the past actually used a chunk of his inheritance to game the CC companies. He would take his $5K card, and order $5k of $1 gold coins from the mint, and he would get 3% cash back on his purchase. Shipping on $5K of coins was ~$40, so he would net $110 each round. He'd just apply the points to his bill, take the coins to the bank, deposit them, and then pay his bill off. He was pissed when they quit letting people buy the coins.
Bailey Guns
05-21-2016, 17:34
Irving has very sound advice. Imagine the cash flow you'd have every month if you didn't have a mortgage at all.
I have used the method you described in the past, and it actually made me a little money (credit card points/incentives). Balance transfers almost never qualify for the rewards on CC's.
Saying that, don't get suckered into CC's because of their rewards. If you can benefit from them, while using the card responsibly, fine. But if not, don't even worry about the rewards.
One guy I worked with in the past actually used a chunk of his inheritance to game the CC companies. He would take his $5K card, and order $5k of $1 gold coins from the mint, and he would get 3% cash back on his purchase. Shipping on $5K of coins was ~$40, so he would net $110 each round. He'd just apply the points to his bill, take the coins to the bank, deposit them, and then pay his bill off. He was pissed when they quit letting people buy the coins.
Did you mean $50K card? cause $5K ain't shit. You're in the poor house or have shit credit if you have a $5k limit on a card.
Why can't you (not you personally) still buy $50K of gold, and take the cash back? Well, there is the PM premium that's likely to negate the 3%.
It just doesn't add up to me. Someone feeding you a line?
kidicarus13
05-21-2016, 18:53
Sounds like this...
http://www.creditcards.com/credit-card-news/mint-closes-loophole-ends-credit-card-coin-sales-frequent-flyer-flier-miles-1263.php
Sounds like this...
http://www.creditcards.com/credit-card-news/mint-closes-loophole-ends-credit-card-coin-sales-frequent-flyer-flier-miles-1263.php
OK, I get it, but his post said "gold coins."
kidicarus13
05-21-2016, 19:02
OK, I get it, but his post said "gold coins."
Ya... he buying something using his credit card in order to reap rewards from his credit card after turning it in to a bank dollar for dollar. What's it matter what the commodity is?
Ya... he buying something using his credit card in order to reap rewards from his credit card after turning it in to a bank dollar for dollar. What's it matter what the commodity is?
Yea, I get it capt obvious. The "gold coins" and bank deposit is where I was getting lost, ok?
PM's carry a premium that you're not going to get back (selling @spot) and you're sure as hell not going to turn them into a bank.
RIF.
Gold in color not in material. Don't get worked up over an assumption.
HoneyBadger
05-21-2016, 23:33
Irving has very sound advice. Imagine the cash flow you'd have every month if you didn't have a mortgage at all.
+1
Irving has very sound advice. Imagine the cash flow you'd have every month if you didn't have a mortgage at all.
I imagine it looks a lot like a Porsche 911 Turbo. :p
I imagine it looks a lot like a Porsche 911 Turbo. :p
Win. Close the thread. ;)
Grant H.
05-22-2016, 18:46
... and order $5k of $1 gold coins from the mint, ...
Did you mean $50K card? cause $5K ain't shit. You're in the poor house or have shit credit if you have a $5k limit on a card.
Why can't you (not you personally) still buy $50K of gold, and take the cash back? Well, there is the PM premium that's likely to negate the 3%.
It just doesn't add up to me. Someone feeding you a line?
His rationale for using some random card he had a $5k limit on was that banks get uppity once you're over $10k in cash.
Not gold as in precious metal. Gold colored $1 fiat currency coins.
Gold in color not in material. Don't get worked up over an assumption.
This.
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