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Mortgage Refinance vs Cash out Refiance

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cobaltnv
Established Contributor

Mortgage Refinance vs Cash out Refiance

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 

TU 810: EQ 813: EX 814 (9/16/09--Loan officer pull)

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ShanetheMortgageMan
Super Contributor

Re: Mortgage Refinance vs Cash out Refiance

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.

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cobaltnv
Established Contributor

Re: Mortgage Refinance vs Cash out Refiance

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 

TU 810: EQ 813: EX 814 (9/16/09--Loan officer pull)

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