Posted on: 16th Jan, 2008 04:48 pm
i live in the west la area of ca. i have a fixed first mortgage and an adjustable heloc. i am going to refinance both to a fixed rate that is lower than the current rate on my first. betting that home prices will fall much further this year, does it make sense for me to take max cash out of my home now, while the value is high/rates are low and put it in short term savings/cd so that i have ready cash for investment property when/if the market crashes? the interest earned in savings will almost offset the additional loan interest. i figure an additional $100k will cost me about $500/year in real dollars.
downside is that my payment is much higher than if i only refinanced the outstanding balances, but i can afford it for at least a year.
if i don't do it now, and market tanks taking my home value down with it, i won't be able to get the equity out when i need it.
thanks
downside is that my payment is much higher than if i only refinanced the outstanding balances, but i can afford it for at least a year.
if i don't do it now, and market tanks taking my home value down with it, i won't be able to get the equity out when i need it.
thanks
Hi Jim,
Welcome to the forum.
If you can get lower interest rates and better terms than the current mortgage you can always refinance. But if you refinance you will also have to pay prepayment penalties. So have added it?
Best of luck,
Larry
Welcome to the forum.
If you can get lower interest rates and better terms than the current mortgage you can always refinance. But if you refinance you will also have to pay prepayment penalties. So have added it?
Best of luck,
Larry
Thanks Larry,
My refi will not carry a pre-pay penalty. So I could dump the entire cash-out lump sum back into the mortgage if the market does not present me with an investment opportunity within a reasonable period of time (18 months or so). However, my payment at that time will stay the same. I can keep the higher payment and pay the loan down faster, or lower the payment by refinancing again, which will cost me about $2K in fees.
My refi will not carry a pre-pay penalty. So I could dump the entire cash-out lump sum back into the mortgage if the market does not present me with an investment opportunity within a reasonable period of time (18 months or so). However, my payment at that time will stay the same. I can keep the higher payment and pay the loan down faster, or lower the payment by refinancing again, which will cost me about $2K in fees.
Hi Jim,
Welcome back.
If you don't need to pay the prepayment penalties, then I think doing refinance will be a better option for you as you will get lower interest rate and your monthly payments will be also lower. You may have to pay $2k as fees but in long run, I think you will able to save a handsome amount.
Feel free to ask if you have any further questions.
Best of luck,
Larry
Welcome back.
If you don't need to pay the prepayment penalties, then I think doing refinance will be a better option for you as you will get lower interest rate and your monthly payments will be also lower. You may have to pay $2k as fees but in long run, I think you will able to save a handsome amount.
Feel free to ask if you have any further questions.
Best of luck,
Larry
hi jim,
i don't think it's worth taking max cash out to invest it. unless you really wanted to use the money for paying down other high interest debt or for home improvements i don't think it's a wise decision to borrow money for it to just sit in an account. also, cash out rates are going to be a little higher when you go over 70% of the homes value. over 80% and you pay pmi, so maxing out would not make sense since you can technically go 90% of your home's value on a max cash out refinance. i would suggest refinancing your first and second mortgage at a rate of 5.625% on a 30 year mortgage with zero points.
i don't think it's worth taking max cash out to invest it. unless you really wanted to use the money for paying down other high interest debt or for home improvements i don't think it's a wise decision to borrow money for it to just sit in an account. also, cash out rates are going to be a little higher when you go over 70% of the homes value. over 80% and you pay pmi, so maxing out would not make sense since you can technically go 90% of your home's value on a max cash out refinance. i would suggest refinancing your first and second mortgage at a rate of 5.625% on a 30 year mortgage with zero points.