Help on ideas for home refinance while rates are low.

[beefed88]

For people with the knowledge of money please review my idea and critique.

Currently:

Original loan sep, 2004

89,500, 30yr, 5.625%, owe $53,000, worth 99,000. Progressively paying a lot to principal.

NEW idea to capture low rates and refinance with idea of moving when house is paid off. Goal refinance equity to avoid possible paying higher rates in 2-4 years on my next mortgage.

refi 90,000, 15 yr, 3.8-4.0%, put 40,000 in 2yr CD @ 1.6%

Any ideas on another vehicle rather than a CD that is just as liquid, to get a higher rate but safer than equities?

[dblack1]

Not a terrible idea, but they are only going to refi up to 80% at that interest rate, which will be about $79k. After all the fees with the refi I'd imagine you'd walk away with a little over $20k, but some here might know better.

[Roscoe]

For people with the knowledge of money please review my idea and critique.

Currently:

Original loan sep, 2004

89,500, 30yr, 5.625%, owe $53,000, worth 99,000. Progressively paying a lot to principal.

NEW idea to capture low rates and refinance with idea of moving when house is paid off. Goal refinance equity to avoid possible paying higher rates in 2-4 years on my next mortgage.

refi 90,000, 15 yr, 3.8-4.0%, put 40,000 in 2yr CD @ 1.6%

Any ideas on another vehicle rather than a CD that is just as liquid, to get a higher rate but safer than equities?

Why pay 3.8-4% on money that is only making 1.6%? You're losing on that one...

Buy silver!

[SVT Lurch]

We would need to know your current payment now so you can calculate the difference in cash flow too, but it doesn't appear to be worth it off hand. Like Roscoe said you're paying more to borrow the money than you're getting back.

but they are only going to refi up to 80% at that interest rate

Actually the rate has nothing to do with it. You can only go up to an 80% LTV on a "cash out" refinance in the state of Texas. The fixed costs on a refinance are around $2,200 + title policy which is usually just under 1% of the loan amount (depending on how old the current loan is).

[AdamLX]

Not worth it.

You're paying fees to access the money.
You'll net $23,000 (from your scenario)
You'll pay 4% on %23000 that's returning 1.6%.

[beefed88]

I realize that I will be paying to access my own money but if in 4 years I go to purchase a home at 5.5-6.5%.

Also I will be refinancing the 53k I owe at a much lower rate and a 15yr note rather than a 30yr.

Right now my mortgage is 520.

[beefed88]

I was told I could refi only the 53 because it is too low of an amount.

[SVT Lurch]

I realize that I will be paying to access my own money but if in 4 years I go to purchase a home at 5.5-6.5%.

Also I will be refinancing the 53k I owe at a much lower rate and a 15yr note rather than a 30yr.

Right now my mortgage is 520.

The new payment on the 15 year @ 3.875% would be $580, of which $320 will go towards principal. Unless that's substantially more than where you are in your current loan it's not going to be worth it.

[Roscoe]

I was told I could refi only the 53 because it is too low of an amount.

Refi for $80k or whatever and whatever amount you have left over should either be invested in something you can yield greater than 5% or I'd just apply it all back towards your loan as your first payment.

The question isn't "should you refi", because if you can drop 2 points, go right ahead. We're just questioning what you want to do with the extra left over from your overage... Although on a loan of that size, your fees may eat up your savings.