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Mortgage Advise

Old 03-02-2016, 01:42 PM
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Took a business risk that has not paid off as quickly as we had hoped. Need some cash to get us through for a while. Excellent credit, steady income, etc, etc. Have 9 years left on current mortgage @ 3.25%. With today rates I think our best bet may be to do a cash out refinance and when the return on the business deal comes in we could pay down some of the mortgage. Any opinions? Spent some time on bank rate website etc. and appears that ThirdFederal has the lowest 10year rate refinance but not sure it's a cash out.

Any input would be appreciated.
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Old 03-02-2016, 01:48 PM
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The problem with using your equity is that they hit you with most of the interest in the beginning of the loan. So your mortgage payments have 50% going toward the principle and escrow and the other 50% going to the interest. Also if your business plans fail you could also loose you home.
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Old 03-02-2016, 01:51 PM
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Call your regular banker and look into a business line of credit.

Do not risk your home with interest rates as low as they are.

John
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Old 03-02-2016, 01:55 PM
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Look at a home equity line of credit. It sounds like your business is expected to pay off in the near term so a heloc for a few year could be a good option. generally no closing costs, and rates are pretty competitive. that way you are only paying interest on what you need. Make sure you get one with no pre-payment penalty.
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Old 03-02-2016, 02:42 PM
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Cash out refi rates will likely be higher than 3.25. I was just quoted ~3.5 on a jumbo cash out with 800+ credit. That's a 30 year fixed.

If you have equity why not do a HELOC. The rate you have is so good and closing costs on the HELOC will be hundreds of dollars versus thousands if you refi.

Good luck!
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Old 03-02-2016, 02:54 PM
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Originally Posted by jtburf View Post
Call your regular banker and look into a business line of credit.

Do not risk your home with interest rates as low as they are.

John
This! Don't risk your home by essentially pledging it for a business loan.

If you must, go to a bank that doesn't have your mortgage and get a home equity line. You can borrow up to $100,000 and it still be tax deductible, regardless of purpose AND you won't have to mess with refinancing your current excellent rate.
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Old 03-02-2016, 06:04 PM
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Thanks for the advise. I'm self employed and go through booming years followed by some crappy ones and typically have enough cash to get us through while socking away pension/profit/retirement $. This time the crappy years were extended due to a bunch of projects tied up in oil & gas industry.
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