I'm in the early process of refinancing to take $15000 cash out for a remodel project. I'm getting cold-feet because I'm wondering if a Home Equity Loan might be less-costly in the long run.
My current mortgage is a 3.375% APR, 5/1 ARM set to adjust in 2 years, with a balance of $344,000 and 27 years remaining on the loan.
Here are the terms on the new options I've been approved for:
Refinance (no cash out) -
3.25% APR, 5/1 ARM for 30 years. Total cost to refinance is $400 if I don't take any cash out. This will lower my current mortgage payment by $90/mo.
Cash Out Refinance -
3.25% APR, 5/1 ARM for 30 years. Total cost to refinance is $1400 if I take $15000 cash out. With this option my mortgage payment will remain the same as it currently is under my 3.375% existing loan.
Home Equity Loan -
4.5% APR on $15000 for 8 years. No loan costs.
If I go with the Home Equity Loan, I will also do the no cash out Refinance, to lower my current mortgage payment by $90/mo.
Do the Cash Out and Equity Loans appear to be somewhat comparable in overall costs?