refinancing a home
victory_tea2085
9 years ago
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Elmer J Fudd
9 years agolast modified: 9 years agovictory_tea2085
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Refinancing house and taking money out
Comments (40)Hi Wierdo, Look at any financial dilemma from a reverse point a view. If your house was paid for, would you spend 6k for a loan to pay off your CC's? Just a thought... GREAT POINT... but, have YOU actually done that? Lets! Imagine you have a $250,000 home free & clear. The home value rises or falls regardless of whether the equity is used. Let's say you have $60,000 in credit card or other consumer debt. (Not unrealistic for the kind of people YOU are referring to.) Let's say you've "seen the light" and have mended your evil consumer spending ways... tightening your discipline and behaving responsibly from here forward. You're paying 8% - 12% - 18% up to as high as 34% INTEREST.... (again, regardless of whether your home value rises or falls.) Let's imagine you are paying 18%* interest on credit cards... (*we're being kind here.... the types you are referring to are usually higher than this,) your credit SUCKS, and the BEST you can qualify for is 8% mortgage* interest rates. (*We're being conservative... there is no more SubPrime lending, and currently the highest rates for ANY mortgage financing are in the mid-7%s... but let's set the hurdles as high as we can for me here...) Let's ALSO imagine your closing costs to access those funds are a whopping $5,000* (for $65,000 total.) (Again... massively conservative. For a $65,000 loan it won't be near this, really.) Your AMORTIZED payments are $476.95/month. Your INTEREST payment portions are $433.33/month. your INTEREST SAVINGS over the consumer credit INTEREST-ONLY costs are $466.67/month. If you *ONLY* pay exactly the SAME as if you were paying ONLY THE INTEREST on the credit cards, you ELIMINATE ALL of your debt FASTER! (You wouldn't be eliminating it on the credit cards at all!) If you pay $100 more (as though you were attacking the credit card debt itself,) it would take you; 50 years if you didn't refinance to optimize the use of your equity... but only 17.5 years if you did it the smart way and used your equity at a lower cost. If you pay $500 more than minimum interest, it would take you; 10 years without refinancing. 7.3 years if you do refinance. Math matters! ;~) Cheers, Dave Donhoff Leverage Planner...See MoreRefinancing: when to cut your losses and switch banks?
Comments (10)Thanks. Yes, the lock extension fell out of the picture largely because DH had done the paperwork and I thought he'd gone with the 45-day lock. As day 45 approached, I pointed out that we needed to push the LO to close or at least update us, and DH *then* mentions that actually it had been a 30-day lock! Ah well. In the end, I'm glad we didn't pay for the extension, though, as we're now about to be beyond 90 days, which is the longest the bank extends. (Interestingly, for new loans they also only offer 60- and 90-day locks now---when we applied the options were 30 and 45. Hmmm...) DH was in regular contact with the LO during that stretch, though, and was constantly assured that "everything is moving along fine; don't worry!" We can't transfer the appraisal, but it's helpful anyway since property taxes in our area are based on value at Jan. 1 if it's fallen over the previous year, and this was done a few days later, so it's probably worthwhile to have anyway as documentation for next year's assessment. We're also happy to pay the title company since they did a good job of turning things around immediately and they shouldn't take a hit for a situation outside their control; it's the bank's in-house costs I don't feel that we should pay if we don't close with them, since the delay is of their doing. Just not sure if legally we must pay them anyway. At this point I'm half tempted to just delay the closing till they finally drop their rates again (which I imagine will happen eventually as they seem to be the last man standing at 5.5%, though who knows) and it becomes a moot point....oy!...See MoreTime frame for selling a house after refinance
Comments (4)There is nothing that can ever stop you from trying to sell your house at any time. It's possible that your loan has a prepayment penalty and it will cost you xtra to sell so soon ... but if you can pay the penalty, yes you can sell. FHA is leery of homes that are resold quickly after refinance or initial purchase - but this affects the potential buyer who is trying to use an FHA loan, not the seller and not another buyer who has another type of financing. FHA's concern is that an unscrupolous seller makes a huge profit on a house that may of only had a cosmetic repair done and is now quickly being sold at an inflated value. FHA actually places a cap on how much "profit" a seller can make in a short period of time. I don't remember if it's the cap is in place for 3 months or 6 months. But even then, the cap is fairly large in my opinion and really only affects professional flippers....See MoreRefinancing
Comments (2)Hi Petunia, If you qualify for conforming (FannieMae or FreddieMac) that wouldn't carry the expensive MIP premiums that FHA does. ALL lending programs available today are government-backed... and frankly, as a borrower, it really makes no difference to you anyway. The loans aren't dangerous to the borrowers... they are dangerous to the funding investors (since that's who loses money in defaults, foreclosures, and unilateral government giveaways.) Luck, Dave Donhoff Leverage Planner...See Morecearbhaill (zone 6b Eastern Kentucky)
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9 years agolast modified: 9 years agoElmer J Fudd
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Elmer J Fudd