skunkaperecords asked:
We just purchased our first home back in March of 2009 at a 30yr fixed 5% interest rate. It is an FHA insured loan and we are eligible for a “streamline” if the interest rates drop below our 5%. If the rates do drop below 5% over the next couple of months, would we be able to get cash with the new refinance? We would go with another 30yr fixed below 5%. We bought our home for $350k in March 2009 and our payments are $2,400+ a month with everything included in that payment.
We just purchased our first home back in March of 2009 at a 30yr fixed 5% interest rate. It is an FHA insured loan and we are eligible for a “streamline” if the interest rates drop below our 5%. If the rates do drop below 5% over the next couple of months, would we be able to get cash with the new refinance? We would go with another 30yr fixed below 5%. We bought our home for $350k in March 2009 and our payments are $2,400+ a month with everything included in that payment.
The reason I ask is because we really need to get $10,000 asap. What about equity line of credit? Is it possible that our home is worth a little bit more than what we paid back in March 2009? We did a lot of cosmetic modifications to it. But I know equity loans are much higher than our current 5% interest rate.
I am new to all of this. Thanks.
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Tags: Equity Line Of Credit, Interest Rate, Interest Rates Drop
5 responses to Would refinancing our home to a lower rate enable us to get cash out?
Consolidating Debts
Usually a refinance is possible for the 80% value of the home. For example if the home is worth $200k you could refinance for $160k and cash out the amount between the current loan balance and the financed amount.
It would be easier and incur fewer fees to do a HELOC, for such a small dollar amount.
You might have only put 3.5% down if you had an FHA loan, so check with your lender for guidance on this.
MAYBE the rates will drop below 5% in the next few months – if so RUN to refinance because it is almost a sure thing that rates will go up early next year.
Would refinancing our home to a lower rate enable us to get cash out?
Credit Report
Unless your equity has increased, you won’t be able to get any money out. It would be very difficult to get a FHA approved home appraiser to apprise your home at a higher value than you originally paid in this market.
If you already have a 5% loan, it will have to go to at least 4.25% to make it worthwhile. You will be paying fees to secure the loan so a small drop in interest rate will cost you money in the short term as well as the long term.
You won’t be able to get a HELOC either since you don’t have the equity. Usually they require more than 10% equity (maybe 20%) to get approved.
Would refinancing our home to a lower rate enable us to get cash out?
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No. I believe the term “streamline” means the lender will only refinance your current balance. Doubt interest rates will drop anymore, so safeguard that 5% rate. Also doubt you can get a HELOC; but if you could it is much better to pay 10% on a short term loan of $10,000 than [example, you do exact math:] even 5.1% on $310,000 for 30 years. If parents cannot loan $, try to get a personal loan from a bank, credit union, retirement plan (be careful!), life insurance, or borrow against your cars (or sell a car!). Avoid loan sharks and “instant cash” places and offers. {Am assuming the $10,000 need is life or death.}
Would refinancing our home to a lower rate enable us to get cash out?
Student Loan Refinancing
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Would refinancing our home to a lower rate enable us to get cash out?
Student Loan Refinancing
The FHA streamline does not allow “cash back” at closing but you may be able to do an FHA cash out refinance which will allow you to pull out cash up to 85% of the appraised value of your home.
For example
If your home appraised for $430K, you could do a cash out loan of $365,500.00 (85% of $430K)
You should start by checking out the current appraised value of your home.
You may be able to get a small home equity line of credit from your local bank or credit union, depending on how much equity you have.
Would refinancing our home to a lower rate enable us to get cash out?
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