If you had about $900k equity in your house, and could get 2.6% interest on a new loan, would you refinance and take some cash out? Our home equity is almost 50% of our net worth.
I've always been in the pay of the mortgage asap and stay mortgage-free group, but with rates this low, we're very tempted. We're also a little nervous to have so much $ tied up in the house.
Bat signal to @Dicey !
I'd have to know a lot more about your finances to determine if you should pull cash out, but you should probably refi your existing mortgage asap. Is this a 15 or 30 year loan? What's your current rate?
@Dicey - Here is the full picture: our house is actually paid off, a refi cash-out is the option to tap into the equity. House value appx. $975k, maybe up to $1m. We're thinking taking out $500k at 2.6% on a 30-yr fixed loan.
We would like to relocate to a different state for dh's work in the next couple of years and we would like to buy a house there (3 dogs, like to have our own place, etc.) The plan would be to get a mortgage on this house to have cash on hand to buy a house when we move. This house would become a rental and the rent would be more than enough to cover all costs, including mortgage payment. We do not want to sell this house at this time. After reading some of the posts on here I'm even thinking that when we buy the other house we try to get a loan there as well if the rates are good. Then we could invest some of the cash. We have no debt at this time.
What do you think? Smart, or stupid, idea? :)
It sounds like you're proposing going into debt for a goal that may be a few years away. Given the mortgage you're describing, you're probably a very high ($300K+) income household. I can understand the hope to qualify for a mortgage while you still have that income and the property is still a primary residence, if you plan to retire before the end of the economic cycle.
An alternative that may simplify your life would be just to prepare with a home equity line of credit (to be kept at near $0 balance until your move), and pair that with some aggressive saving out of that large income you have.
Do you believe you're behind on saving for retirement and need to catch up with some more skin in the market? People believe rates would shoot up in 2013, yet we're back today just as low.