House refinanced! Have questions...

iVillage Member
Registered: 12-12-2004
House refinanced! Have questions...
4
Tue, 08-30-2005 - 4:20pm
Hi, Danni, Heather, and everyone. We got the house refinanced into a fixed mortgage! YEAH! No more ARM with index/margin nightmares! Appraisal fantastic. Docs to be signed next week. FICO is good. Q's: We can take some cash out. Last time we did this, we got the new roof. DH kept the rest in his checking account (!) It seems like every time we do this, we end up taking cash out, and paying off stuff, only to start the process again of cc/cars/etc. DH wants NO MORE than 5K out. That would not even begin to pay off the cars, let alone large cc. It would pay off some smaller cc's. Dont know the house payment yet, so I am very wary of doing this again. Any advice? THanks. WHiz.
iVillage Member
Registered: 03-27-2003
Tue, 08-30-2005 - 6:34pm

Congrats on the refi! It sounds like a much better deal for you, and it must feel great for the appraisal to have come in high.

I think you are wise to be thinking twice about taking the cash out. It's SOOO easy to get careless with cash, and then you're right back where you were before, only with a larger mortgage.

If you *do* decide to take cash out, be sure you decide ahead of time *exactly* how the money will be used (which credit card it will pay, what home improvements it will finance, etc.) and to take out only *exactly* the amount you need.

Personally, I won't ever use equity in my home to pay back credit cards or other loans. To me, my home is my most precious physical asset, and I won't risk it to save a few bucks or to pay for past mistakes. Besides--I know myself, and I know the stats. If I take the "easy" way out by using my equity to pay loans, I'm just going to end up back in it deeper in a few years. The lessons I have learned by paying my debts the hard way are more valuable than any amount of money saved by refinancing or taking out a home equity line. My brother serves as another illustration--he used to own several rental properties. When they ran into trouble, they sold their properties to pay their debts. Now, a few years later, they're back in it again, deeper, and without real estate to tap for cash. It makes me sad to think about it.

Now, I *might* consider taking cash for needed repairs or improvements on my home, if my homes value would be increased by at least the amount of the loan, or if the repair can't be put off any longer without jeopardizing the value of my home or leading to more expensive repairs. Ideally, I will have the money for these things saved in advance, but obviously we don't live in an ideal world.

Good luck and blessings,

Heather

iVillage Member
Registered: 08-19-2003
Wed, 08-31-2005 - 7:16am

I would not cash out equity in the house to pay off debts. If you use it for new windows then fine, but not for debts.

Personally we cashed out equity to pay off cars & cc's and its my biggest regret, we should have just kept paying or sold the cars we could not afford.

Shannon

Shannon


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iVillage Member
Registered: 03-26-2003
Wed, 08-31-2005 - 4:06pm

Taking cash out is an "easy fix" - it's an easy way to transfer unsecured debt to your house.

All my best,
Danni

iVillage Member
Registered: 12-12-2004
Thu, 09-01-2005 - 12:20am
Hi, Shannon. I do appreciate your pearls of wisdom. You are right---DH is concerned that we'll go down that path (again!!) and pay off cc's and car loans, and then, run everything back up again. I am only taking $5,000 out. Why? Well, I anticipate big medical bills, and I cant charge anything. My cc is at max, and I did this mess to myself, so I want to pay it off myself. DH thinks that we will be tempted to get new cars then, and start this mess all over. So, for now----I am working extra when I can, and plan to get a PT gig soon. Thank goodness I only have one cc, but still, that is one too many! I think Heather said it, too----dont mess with equity. Whiz.