Cash out refinance

Cash out refinanceCash out refinance
Korot.Ira asked 4 years ago

Hello all,

 

We are trying to figure out if doing a cash out refinance is a good option for us. Currently we have a a nice mortgage payment at 4.25%. We have about $ 180K equity in the house. 

 

We were looking for a cash out to do some remodeling in the kitchen and odds and ends. Probobaly will cost $ 30-40K. The mortgage broker is about to get us approved for 3.875% with 100K cash out. If we took the full $ 100K, our mortgage payment would increase by $ 493. If we took $ 50K it would increase by $ 270. So here’s our dilema:

 

1) We can make the increase in payments of $ 493 as some bills are going to be paid off soon which will free up about $ 230.

2) Aside from the remodel, we don’t really have any other plans for the money besides putting it in some sort of liquid savings or money market to let it grow.

3) It would be nice to have some liquid cash instad of it all tied to the house.

 

Does it make sense for us to increase our mortgage payments to pull $ 100K equity out of the house for remodel and use the other for savings?

 

I know i should be answering my own question but looking for guidance from folks that have done this srt of thing before.

 

Some of our debts:

credit card which have small balances. we pay throughout the month

both of us have student loan payments. 

we have about $ 15K tax bill which we are paying monthly in installments. 

1 car payment

 

 

Ideally i would not want to pay off any of the above debts with the cash out except for maybe the IRS bill. 

 

I guess what i really want to know is: should i leave the equity in the house and continue as is and pull the money at a later time? or pull now and use half for remodel and the other half as liquid cash/savings. And is 3.875% a good rate to lock it at now? I’m assuming rates will jump at some point and it might not be as favorable? 

 

Thanks 

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