Financing in 17112>Question Details

Needmorespace, Both Buyer and Seller in 17112

Refi w/cash out or wait?

Asked by Needmorespace, 17112 Fri Apr 9, 2010

I have 17 months left on a 7yr ARM. I am also looking to move to a larger home. Should I refi now with a $20,000 cash out or wait it out a few more months incase I find a new house? How will refinancing effect my credit if I do it and then find a house per chance?

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Needmorespace. It all depends upon what your priorities are? If buying another home for more space is your true priority then if you are ready to do so now is the best time to buy another home before the real estate market makes its upward swing. Homes today are selling for some of the best prices ever and we are still in a buyer's market in most area of Central PA. It may not be the best time to sell your home but, again, if your true priority is that home with more space then I would advise to get your present home sold and try to get another place while the selling prices are good and also before interest rates start their upward swing as our economy improves. Cashing out could hurt you if your current home does not sell quickly or at the price that you anticipate. You do not want to have to go to the settlement table on the sale of your current home owing money.
0 votes Thank Flag Link Sat Apr 10, 2010
Good advice below.

I agree with everard: If you're planning on moving and you're worried about the ARM, then why not try to sell now and buy a new place now?

It seems to me that the transaction costs on a refi (whether it's cash-out or not) when you're planning to sell in a year or so anyway may not be worth it. And, as everard notes, you'll be ending up with a bigger mortgage. You don't say what your interest rate is now, or what it'll adjust to, but you should run the numbers just on your current mortgage, a refi with cash out (if you're even able to do that), or a refi when the ARM adjusts. I'm guessing the least attractive option is refinancing now, whether or not you take cash out.

Hope that helps.
0 votes Thank Flag Link Fri Apr 9, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
Unless you have a substantial amount of equity in your property, you might not be able to do a cash-out refinance, but you'd still be able to do a rate/terms refinance.
0 votes Thank Flag Link Fri Apr 9, 2010
.If you refinance now and do not have to pay a penalty for early termination , you still will have a REFI cost to go to a new loan. The $20,000 cash needs to be invested very safely , because you might need it if your existing home brings in less than you think.The $ 20,000 still will require an interest payment that might be a lot higher than you get in aa money market account ,even after the tax impact. I could see it as a good move if you use it , to pay off a high interest credit card or car loan .This might improve your credit .
The issue about selling your house, and finding a larger one if it sells, is most likely not a big issue.There are enough houses for sale .You might be able to reserve one , with a house to sell clause .
If you really want an other house now , I would advice to put it on the market now,price it right ,sell it in a few weeks and start looking for a new house now, and forget about refinancing.
Decide on your priority ,do not be greedy and do what improves your life the most .
For the financing you should contact your bank .I am a realtor.
0 votes Thank Flag Link Fri Apr 9, 2010
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