financing decision

[hammer]

I have written an offer on a house that the broker tells me should be accepted. It is about 30% off the peak. Will it be worth less in the next year…probably. I have been sitting on the sidelines for 5 years, and just feel that this particular property is special. The house needs work.

The price is $950,000. I have a couple of financing options.

I can get a 75% loan at 5.75% 30 yr fixed. No pts.

I could also get a 75% loan 5 yr fixed at 4.87 40 yr amt..0 pts.

I am having a tough time deciding on whether or not to go with the 30yr fix. The 40 yr amt is interesting because it is closer to interest only, and I am putting 25% down on the house. The house needs work. I was hoping to get a HELOC after I close, and in the next 15 months, use the money for a remodel, and then secure a 30 yr fixed once the remodel is complete. HELOC rates are cheap

My wife and I have a combined income of $300,000, so writing a check for a $300,000 remodel is not in the cards. On the other hand, maybe we can’t get enough $ for a HELOC and we don’t remodel for 7 yrs. Now I am flirting with future rates

It seems to me that a refinance is in the cards once we remodel, so why fix it now? Am I missing something?

I value the opinions of people on this board, so have at it.

[Raybyrnes]

Seems like your long term rate of borrowing is higher than short term borrowing. WOuld be logical to put more money down and find some tease equity lines to do the remodel. Probably could find 1% for 6 months and prime minus a point thereafter.
As income come in you can pay down the equity line as a hedge against rising interest rates.

[Raybyrnes]

Seems like your long term rate of borrowing is higher than short term borrowing. WOuld be logical to put more money down and find some tease equity lines to do the remodel. Probably could find 1% for 6 months and prime minus a point thereafter.
As income come in you can pay down the equity line as a hedge against rising interest rates.

[Raybyrnes]

Seems like your long term rate of borrowing is higher than short term borrowing. WOuld be logical to put more money down and find some tease equity lines to do the remodel. Probably could find 1% for 6 months and prime minus a point thereafter.
As income come in you can pay down the equity line as a hedge against rising interest rates.

[Raybyrnes]

Seems like your long term rate of borrowing is higher than short term borrowing. WOuld be logical to put more money down and find some tease equity lines to do the remodel. Probably could find 1% for 6 months and prime minus a point thereafter.
As income come in you can pay down the equity line as a hedge against rising interest rates.

[Raybyrnes]

Seems like your long term rate of borrowing is higher than short term borrowing. WOuld be logical to put more money down and find some tease equity lines to do the remodel. Probably could find 1% for 6 months and prime minus a point thereafter.
As income come in you can pay down the equity line as a hedge against rising interest rates.

[(former)FormerSanDiegan]

Whatever you do, I would not make plans that depend on refinancing after your remodel.

If you are able to refi afterwards, that’s great. But I wouldn’t plan on it.

I would take a fixed rate on the first and use the HELOC for remodeling (However, I doubt that you can get a HELOC for more than 90% CLTV or about 135K in this case)

Since you are planning on using a HELOC for the remodel you will have enough variable interest rate exposure.

I would not compound that with a 5/1 ARM.

Based on my personal experience your remodel may take twice as long and will cost 50% more than you plan. Also, I have a friend who is near the end of a remodel and cannot secure financing to combine his existing 1st and HELOC used to remodel (due to ~ 15% further depreciation in his neighborhood). He is stuck with the terms of his original loans.

You can plan on combining your loans after completions, just don’t depend on that happening.

[(former)FormerSanDiegan]

Whatever you do, I would not make plans that depend on refinancing after your remodel.

If you are able to refi afterwards, that’s great. But I wouldn’t plan on it.

I would take a fixed rate on the first and use the HELOC for remodeling (However, I doubt that you can get a HELOC for more than 90% CLTV or about 135K in this case)

Since you are planning on using a HELOC for the remodel you will have enough variable interest rate exposure.

I would not compound that with a 5/1 ARM.

Based on my personal experience your remodel may take twice as long and will cost 50% more than you plan. Also, I have a friend who is near the end of a remodel and cannot secure financing to combine his existing 1st and HELOC used to remodel (due to ~ 15% further depreciation in his neighborhood). He is stuck with the terms of his original loans.

You can plan on combining your loans after completions, just don’t depend on that happening.

[(former)FormerSanDiegan]

Whatever you do, I would not make plans that depend on refinancing after your remodel.

If you are able to refi afterwards, that’s great. But I wouldn’t plan on it.

I would take a fixed rate on the first and use the HELOC for remodeling (However, I doubt that you can get a HELOC for more than 90% CLTV or about 135K in this case)

Since you are planning on using a HELOC for the remodel you will have enough variable interest rate exposure.

I would not compound that with a 5/1 ARM.

Based on my personal experience your remodel may take twice as long and will cost 50% more than you plan. Also, I have a friend who is near the end of a remodel and cannot secure financing to combine his existing 1st and HELOC used to remodel (due to ~ 15% further depreciation in his neighborhood). He is stuck with the terms of his original loans.

You can plan on combining your loans after completions, just don’t depend on that happening.

[(former)FormerSanDiegan]

Whatever you do, I would not make plans that depend on refinancing after your remodel.

If you are able to refi afterwards, that’s great. But I wouldn’t plan on it.

I would take a fixed rate on the first and use the HELOC for remodeling (However, I doubt that you can get a HELOC for more than 90% CLTV or about 135K in this case)

Since you are planning on using a HELOC for the remodel you will have enough variable interest rate exposure.

I would not compound that with a 5/1 ARM.

Based on my personal experience your remodel may take twice as long and will cost 50% more than you plan. Also, I have a friend who is near the end of a remodel and cannot secure financing to combine his existing 1st and HELOC used to remodel (due to ~ 15% further depreciation in his neighborhood). He is stuck with the terms of his original loans.

You can plan on combining your loans after completions, just don’t depend on that happening.

[(former)FormerSanDiegan]

Whatever you do, I would not make plans that depend on refinancing after your remodel.

If you are able to refi afterwards, that’s great. But I wouldn’t plan on it.

I would take a fixed rate on the first and use the HELOC for remodeling (However, I doubt that you can get a HELOC for more than 90% CLTV or about 135K in this case)

Since you are planning on using a HELOC for the remodel you will have enough variable interest rate exposure.

I would not compound that with a 5/1 ARM.

Based on my personal experience your remodel may take twice as long and will cost 50% more than you plan. Also, I have a friend who is near the end of a remodel and cannot secure financing to combine his existing 1st and HELOC used to remodel (due to ~ 15% further depreciation in his neighborhood). He is stuck with the terms of his original loans.

You can plan on combining your loans after completions, just don’t depend on that happening.

[PCinSD]

bump.

Somebody just spammed the site. So I compulsively bumped enough articles to push them off the active topics list.

[PCinSD]

bump.

Somebody just spammed the site. So I compulsively bumped enough articles to push them off the active topics list.

[PCinSD]

bump.

Somebody just spammed the site. So I compulsively bumped enough articles to push them off the active topics list.

[PCinSD]

bump.

Somebody just spammed the site. So I compulsively bumped enough articles to push them off the active topics list.

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