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My wife and I are working on refinancing our 1st and 2nd mortgages (~$150k total). As of a couple of weeks ago we were told we could get 4.875 with 1pt. Our appraisal was just done and it looks like it may come in at ~$235k or so. Based on this were are thinking about consolidating my student loans into the mortgage (~$35k). This would give us a new loan of ~$185k which will still be below the 80% LTV. Our HHI is ~$130k and our credit scores are all ~800.
How would including a cash out of $35k affect our rate etc?
Also, with mortgage rates dropping over the last few weeks should we be able ot get 4.875 (or lower) without a point?
Thanks in advance for any help.
Cheers
What is the rate on the student loan? If it's not much higher I wouldn't do it as you'd be trading unsecured debt for secured debt, puts you in a riskier position in the situation where values were to decrease and you need to sell for some reason.
Cash out has a hit to the rate that just doing a rate/term refinance doesn't too. Rates started to head up but you probably already have realized that since it's been awhile since your post.
THanks for the advice Shane. THe student loan rate is 6%. You make a good point about the secured vs unsecured debt. However, I could save some significant $$ with a refinance of the SL for two reasons: 1 the interest rate would be lower; 2) I would be able to deduct the SL interest (which I cannot now due to earnings limits). Of course all this would depend on the difference in rate from a simple refi to teh cash out refi and on our home appraising for >$230k.
I noticed Rates are going up. We are locked (I think) at 4.875 with 1pt.
Thanks again for the help Shane, I appreciate it.
Cheers