I was wondering what the investing hivemind might think about the situation I'm in. I had posted this in personalfinance as well to get their opinion.
Have a house where I am currently refinancing to a 2.75 30y fixed rate (including 4500 in lender credits)
Appraisal just came in and it is, somewhat predictably, a high value.
I was thinking to do a cash-out refi instead of a rate-and-term, take out ~100k in cash to bring up the mortgage to 80 percent of the new value. I could afford this with my monthly budget but it would be tighter, around half my net pay after taking out all taxes/401k/hsa/roth contributions. Would still be <30 percent of my gross pay (including PITI). The rate would stay the same but I'd have to pay 1k in points instead of receiving a 4500 lender credit. (or I could get a 2.875 rate with a 2k lender credit).
My thinking was that, because the loan interest rate is so low, it makes more sense to grab the cash and then invest it (index fund, rental property, etc) rather than keep it in the house piggy bank. Inflation is high these days, so I wasn't looking to keep much in cash - but I did want to increase my emergency fund slightly before investing the rest.
Do people think this is a good idea or is it better to keep the LTV lower and stick to a rate and term refinance?
Thank you!
Submitted May 17, 2021 at 05:53PM by britneysneers https://ift.tt/3ys7npB
