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Old 07-17-2008, 01:48 PM
 
3 posts, read 7,038 times
Reputation: 10

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Hi All,

Refi in NC

This December we will be in our first house for 4 yrs and start the last yr of our 5 yr arm. We
paid $221,000 and the Heloc was taken out to cover the 20% down payment. We were extremely
lucky to move into a neighbor w/ good appreciation and our house is currently worth btw
$285,000-$295,000. Most homes within our price range sell quickly and then a renovation or
addition is done…it has even been a few tear downs.

We are currently exploring the option to add an addition.(we currently have drawings and several
bids) Since we had our first child in june, we decided to wait 6 months and see how the budget
goes, since it’s 3 of us now.

Since we are uncertain about the future regarding the addition, my question is would it be wise
to go ahead and refi and lose the heloc or wait until we are certain about the addition? I
would consider something similar to an ING 5yr arm, since the no closing cost is appealing. We
would do another arm b/c our current house is only 2 bedrooms and we are planning on staying
there for another 2-3 yrs, if we do not do the addition. If only our original arm was a 7yr it
would a lot simpler!!

No debt except student loans…

5 yr Arm - 167,000 – fixed 5.125 after the 5th yr it has a 5 % cap
Heloc - 44,200 – prime + 0 – only made interest payments

~$1265 monthly mortgage

Thanks in advance for the help/opinion!

The search feature of this forum is really good! I’ve enjoy searching around and reading other
refi topics
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Old 07-17-2008, 02:15 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 16,051,202 times
Reputation: 1008
all lenders offer 'no closing costs', but they offer a higher rate to cover those costs.

If you're adding additional sq footage then you may need 'lenders approval' to do so. A lot of ppl don't notify the lender when major construction is being done to the property.
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Old 07-17-2008, 02:20 PM
 
3 posts, read 7,038 times
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gotcha...i was using ING as an example.

I've spoken to 2 lenders regarding a construction to permanent loan to cover the cost of the addtion.

guess i should reach out to some lenders regarding ARMs to see what's available, if we decide to refi.

thanks...
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Old 07-17-2008, 02:21 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 16,051,202 times
Reputation: 1008
you wouldn't need to do a 'construction to perm' refinance.

you can simply do a refinance cashout or increase your HELOC.

increasing your HELOC would probably be the better route as they're no closing costs with most banks AND the prime rate is very low now.

Quote:
Originally Posted by passngerisde View Post
gotcha...i was using ING as an example.

I've spoken to several lenders regarding a construction to permanent loan to cover the cost of the addtion.

guess i should reach out to some lenders regarding ARMs to see what's available, if we decide to refi.

thanks...
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Old 07-17-2008, 02:27 PM
 
3 posts, read 7,038 times
Reputation: 10
i see...haven't explored that option yet.

(example w/ random numbers)
addition = $100,000

i would increase my HELOC to cover the addition, since i can borrow against the equity in my house, correct? what happens to the original 5yr arm. loan?

thanks again.
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Old 07-17-2008, 02:30 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 16,051,202 times
Reputation: 1008
Not sure what the current rate may adjust to....

If you do a refinance cash out....you may run out of money.
If you take out a full HELOC...you can tap into it when you want.

You still have 1yr left on your ARM...

Quote:
Originally Posted by passngerisde View Post
i see...haven't explored that option yet.

(example w/ random numbers)
addition = $100,000

i would increase my HELOC to cover the addition, since i can borrow against the equity in my house, correct? what happens to the original 5yr arm. loan?

thanks again.
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Old 07-17-2008, 02:57 PM
 
28,460 posts, read 80,948,175 times
Reputation: 18660
On pure "math" you could get a nice simple fixed 30 year loan around 6.30% that would see your P&I be about $1275 on $207,000. Is you current payment including taxes? With one loan for $207,000 of course you'd be paying back principle too, not just interest.

For piece of mind it is a different question -- as you say you a facing a reset next year I do not know how big a concern it is to see your current ARM reset to whatever the rate/cap is. If it is more than 1 or 1.5% your payment would grow quickly with no benefit to you at all... Who knows where prime might be in a year...

Just because you MIGHT sell in 2-3 years there is no reason not to get a 30 year loan. If you can afford more you can always pay down the principle. If you need to get a HELOC down the road to do an addition that option will always be there. Just pay the current one off, keep your credit in good shape and you can always talk about future needs...
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