Posted on: 01st May, 2010 05:28 pm
we are in the process of refinancing our 30-year loan @ 5.375% (6 years in) to 4.375%. we owe $219k and planned to pay down $19k, so we'd only be refinancing $200k. (the appraisal has not been ordered, but we feel confident it will come in at least at $500k.) our monthly payment would increase by $80, which is easily doable. i told a friend and he said we'd be smarter to take out some extra money and pay off our second home. we bought a beach property in nov. 2009 and owe $185k on it.
a few questions: first, do you think our lender would let us borrow $350k versus the $200k? if so, is there any wisdom in paying off the beach property (we could probably use some cash to pay off the extra $35k)? our p&i on the new $350k loan would be $2655 versus the current p&i payments on the two 30-year loans of $1427 and $993 (primary and 2nd home, respectively), so an increase of $235 a month. however, the loans would be consolidated at a better rate and in a 15-year loan.
a few other pertinent facts: we are hit by the amt and do not realize much (if any) benefit from the interest we pay on the 2nd home.
ok, folks: we need some advice before we get too much further on this refinance! we are grateful for any advice you can offer!
a few questions: first, do you think our lender would let us borrow $350k versus the $200k? if so, is there any wisdom in paying off the beach property (we could probably use some cash to pay off the extra $35k)? our p&i on the new $350k loan would be $2655 versus the current p&i payments on the two 30-year loans of $1427 and $993 (primary and 2nd home, respectively), so an increase of $235 a month. however, the loans would be consolidated at a better rate and in a 15-year loan.
a few other pertinent facts: we are hit by the amt and do not realize much (if any) benefit from the interest we pay on the 2nd home.
ok, folks: we need some advice before we get too much further on this refinance! we are grateful for any advice you can offer!
Hi DCRunner,
If you have equity in your property, then you would be able to refinance and get a loan of $350k. However, you should refinance the loan only if you plan to stay in the property for a longer period of time, for example 6-8 years. This will help you to offset the closing costs that you pay at the time of refinancing.
If you have equity in your property, then you would be able to refinance and get a loan of $350k. However, you should refinance the loan only if you plan to stay in the property for a longer period of time, for example 6-8 years. This will help you to offset the closing costs that you pay at the time of refinancing.
Hi DCRunner,
Just a couple of points.
Yes, you can take cash out to pay off your vacation home as long as your loan to value on your primary home does not exceed 75-80%. At a value of $500,000, you should be looking at loan to value of 70% with a loan of $350,000.00.
How much would your payment change with a lower 15 year fixed rate of 4.125%? I just ran your scenario through a pricing engine and I can get a 15 year fixed rate at 4 to 4.125%.
Just a couple of points.
Yes, you can take cash out to pay off your vacation home as long as your loan to value on your primary home does not exceed 75-80%. At a value of $500,000, you should be looking at loan to value of 70% with a loan of $350,000.00.
How much would your payment change with a lower 15 year fixed rate of 4.125%? I just ran your scenario through a pricing engine and I can get a 15 year fixed rate at 4 to 4.125%.