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I'm new to this whole thing, so please bear with me. My dad was a realtor for 25 years, and he told me that the absolute worst thing you can do is to refinance all the time and use your house like a bank account. I'm assuming he meant to buy things you don't need or to blow it on things like trips. If he were still around, I'd ask him.
I paid $175k for my house in 2013 - 4.0% conventional/ 30 year
I owe $150k right now
My realtor said that I could sell for $200-$210k
By this math, assuming I sold for $200k, that would mean $50k equity. I don't want to pull any of it out now, but I've been thinking. My main sewer line has backed up twice recently, and the last time it happened, the guy said I have a low point in the line and that it will most likely need to be replaced eventually. Looking online, it seems like this job can be anywhere from $5,000 to $20k+. Mine seems basic and has no obstacles, so I'd assume it'd be around $6-$10k. I don't really want to go $10k out of pocket. Would a HELOC or something be my best bet? How long does a refinance take?
I'm planning to stay in this house for the long term. I've been paying an extra payment per year, and hope to have it paid off a bit early. I thought about refinancing into a 15 year, but it's not worth the risk to me.
I also recall hearing about some kind of line of credit you can qualify for, but if you don't use it you don't have to pay anything back. Any info on that? I'm basically looking at how I can best use my house as a line of credit in the event of an emergency.
Also, is there any way of refinancing that doesn't involve a payback or second mortgage? Just trying to learn my options so if/when my sewer line goes out, I can decide if I want to go out of pocket or refinance some equity. Thanks.
Bad news: If you sell your house for $200K you won't have $50k in your pocket. You've forgotten closing costs for the seller and the biggie of realtor commissions (typically 5-6% of the sale price).
If you are thinking of an unsecured line of credit, IF you could get one, the interest rate would knock your socks off.
You were smart, IMHO, to not switch to a 15 year mortgage. Too much risk is right.
Personally, I'd take that extra payment you're putting towards the mortgage and put it in an emergency fund for exactly the kind of thing you're talking about. I'd look into a credit card to cover some of this stuff IF NECESSARY. I'd look to see if my credit union would do a small personal loan.
As for covering unexpected medical bills - you should have insurance that does not have a deductible that you couldn't cover out of pocket. If you have a higher deductible than you can cover out of pocket, seriously consider changing to a lower deductible plan during open enrollment in November. If you have no medical insurance at all, well, none of this is going to matter because one little medical issue, and your screwed.
What you're thinking of is a home equity line of credit. Borrow on it as needed up to a specified amount. If you don't use it, no charge.
I've been a homeowner for 39 years and we're building a new home and paying cash. I've been thinking, and I think the key to us getting to that point is: When we've refinanced, we never took cash out, and as we bought and sold we always rolled all our equity into the next house. With that being said, major home repairs like sewers or foundations, or major medical expenses are justifiable uses of home equity, IMO. Trips to Hawaii or luxury car purchases are not. YMMV.
If you are over 62, look at the Reverse Mortgage line of credit. Many seniors are using it for that very reason. Best of all, it doesn't require repayment until you permanently leave the house.
Find a local expert and pick their brain if this applies to you. Don't trust those call center reps from the companies that advertise them on tv to get it right.
If you are over 62, look at the Reverse Mortgage line of credit. Many seniors are using it for that very reason. Best of all, it doesn't require repayment until you permanently leave the house.
Find a local expert and pick their brain if this applies to you. Don't trust those call center reps from the companies that advertise them on tv to get it right.
Terrible advice.
OP has very little equity. OP isn't even sure they need the money, they were just wondering how best to set things up in case they need it.
Terrible advice.
OP has very little equity. OP isn't even sure they need the money, they were just wondering how best to set things up in case they need it.
Excellent advice.
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