Should I cash out when I refinance?

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I am the process of refinancing my mortgage. I have a second mortgage and the lender wants me to pay to go through with the refinance. They gave me two choices. 1) bear one second mortgage refinancing cash and go through. or 2) get money to pay the second actually strengthen the mortgage as a mortgage. The additional cost of money, about $ 1500.Ma wondering if I should use your savings to pay for the second mortgage amount of $ 80,000. But because of my new mortgage rate is below 5%, I do not know if I could do better by investing $ 80k is a conservative mix of stocks, bonds, cash and gold mutual funds , and get out before the next 20 aastat.Kommenteerida? Is it time to be cautious and reduce debt, or should I try to earn 5% by investing in?
I have two mortgages. My first loan is due to the exp of 2 years (it has a fixed rate of 5.75% today), my second loan is a HELOC w / the current rate of 9.45%. I probly have less than 5% of the equity in my house was built because of the depreciation of housing. My credit score is around 700-725, most likely I spout a great balance on my luck renewable krediitkaardile.on good as the value of my home increases the next 2-3 years due to developments around the LG In my neighborhood, but I’m not sure if something better rate than I do now. If I refinance now, I will not be able to consolidate their credit card debt is my mortgage because I do not have greater equity and my assumption, BEC will be closing costs must be added. However, when I refinanced, I can get another five years and not have to worry about my rates go up for a mean period of time. Should I refi now or wait a little longer (in my exp adj 2 years, but I do not know whether to go for a HELOC is a follow )?????

  1. Reply
    February 2, 2011 at 8:30 pm

    I would try to keep 6 months living expenses in your savings, in case something happens. For me, that security would be worth more than any slight financial advantage by fiddling with the mortgages. If I already had those living expenses on hand, then I would take the remainder, and in combination with a larger first mortgage, pay off the 2nd. A first mortgage will generally have a lower interest rate, anyway, because it’s first in line.

    I would not raid any 401k or other retirement savings to do this.

    Also, consider this question. Would you take equity out of your house in order to have cash to invest? My answer would be no, and my advice to most people would be no. But you’ll have to answer for yourself.

  2. Reply
    Doctor Deth
    February 2, 2011 at 8:48 pm

    if you are going to refi, you would have to pay off all loans I imagine – are you sure you even have ANY equity in teh house at all that would allow you to refinance?

    if you have 2 mortgages, I doubt you had much equity left after taking that 2nd mortgage and most homes have gone DOWN in value at least 20% in the last 4 yrs and they usually only let you refi up to 80% of your homes value

    a “conservative” mix of investments won’t get you much more than 5% return most likely

    you should be looking to get the mortgage paid off as quickly as possible, not pulling cash out of it and going back to a 30 yr mortgage

  3. Reply
    February 2, 2011 at 9:35 pm

    If you have the money saved up to pay the fees for a refi, then why don’t you pay off your credit card bills now with those funds instead of looking for a new loan now. Your HELOC rate is not going to change and your adjustment period is in two years. A lot can happen in two years.

  4. Reply
    Mary B
    February 2, 2011 at 10:22 pm

    It depends, is your HELOC at a fixed or adjustable rate? I can’t tell by looking at your rate, because it would depend on how well your credit was when you originally did the loan.

    I would suggest another alternative: Credit Counseling for your credit cards.

    When you ‘consolidate’ credit card debt and roll it into your home, you are esentially taking unsecured debt, and turning it into secured debt, and this will always cost you more money in the end. You aren’t “saving” anything per month…you are just paying less, and and there is a HUGE difference.

    If you have an adjustable rate mortgage, I would recommend a refinance to a fixed or a 5/1 or 10/1 ARM (depending on how long you plan to stay in the home..only you can answer that).

    However, if you didn’t have very much credit card debt when you originally took out the loan, and have maxed out your credit cards since then, you may not even qualify for a refinance because your debt-to-income will be too high.

    I wish you luck.

  5. Reply
    February 2, 2011 at 10:30 pm

    The chances that the rates are going to get any lower over the next 2 years on either of your mortgages are very slim to none. Most likely rates are going to continue to increase. The more you borrow against your home compared to what your home is worth, the higher your interest rate will be. You don’t know what the future holds in store for you and your financial situation at this time. Therefore, I would recommend refinancing now to lock into a fixed rate. Combine your 2 mortgages into one, pay PMI as it is now tax deductible and secure your fixed rate now instead of waiting until the rates increase. In 2 years if your home value increases look into taking out an equity line at that time to consolidate your debt if you still need to. Best of luck.

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