Should I cash out refinance?

[b4laura]

Hi!

I am trying to figure out the best method for paying off several loans I have.

Here is my situation:

I currently have a main and 2nd (cottage) home.  I have seperate mortgages on these.  I am also about to start my MBA and will need to fund $32,000 of the program with $48,000 coming from company support.  I have equity in my main house that I can cover one of these or I can cover both with the equity and cash.  I want to get input and ideas on the best way to handle these... I feel that having 3 seperate loans is not the best option.

1. Home (Main Residence) -   Owe $149,000 on $175,000 mortgage @ 4.38%.  Current value of the home is ~$265-275,000
2. Home (Cottage) - Owe $66,000 on 67,600 mortgage @ 5%.  Current value of the home is ~85,000
3. Graduate School Loan - $32,000 at projected 6%

Some other ways I can look to pay off the graduate school:
401k?
Roth IRA?
Traditional IRA?
Kids 529 - Currently have 25,000 saved for them... but could use that toward my 32k..?

I spoke with a mortgage broker who provided I could look to do a cash out refinance on the main residence... the rate would be in the mid 4's but I was not given an absolute rate.  I would be raising the rate on my current balance but reducing the rate on my other loan and grad school?  Is this the best option for me or should I be considering alternate ideas???

[RWD]

What kind of rate can you get on a HELOC?

[b4laura]

Estimate would be prime + 1 - 1.5%.  Interest only first 10 years on 30 year total.

[b4laura]

Estimate would be prime + 1 - 1.5%.  Interest only first 10 years on 30 year total.  Variable.

[the_fixer]

Sell the cottage take the ~ $13,500 that you clear  and use that to start college and pay for the rest as you go with the savings from not having a mortgage to pay on the cottage.

Should get you just about there might have to cut back on spending or work a little extra here and there.

You are trying to take the easy way out by borrowing the money.

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[TomTX]

Sell the cottage. Or sell the main house and live in the cottage.

You are floating waaay to much financed lifestyle.

[wageslave23]

Don't over think it.  Its 30k.  Every extra percentage in interest is $300/yr.  If you have to finance, go with whatever is easiest and cheapest (not a refi).  And then pay it back in a year or two.

[Chrissy]

I’d use the 529 money. How old are the kids?

[ericrugiero]

You have several choices. 

Keep living with debt and financing some of your lifestyle.  This is "normal" but won't get you to FI very quickly.  You can shuffle some of the debt around to different accounts and get slightly better interest rates that will help a little but that won't make a huge difference.  Your worst interest rate is 6% which isn't all that bad.  If you pay closing costs on a loan it will take several years to get your money back.  I don't think your biggest problem is the actual interest rate, it's that you have to much money in debt that is costing you money in compounding interest. 

Sell the cottage and use that money to pay off most of your student loan.  This is the best option financially right now.  If you combine it with frugal living and saving you will make a significant step forward. 

Get aggressive in your frugal living and pay off your student loans quickly.  There is opportunity cost here because you won't have as much money in the market as with the second option.

[b4laura]

I’d use the 529 money. How old are the kids?

Kids are 4 and 6.

I also have $50k in a high interest savings account I could pull instead of borrowing. 

[b4laura]

Sell the cottage. Or sell the main house and live in the cottage.

You are floating waaay to much financed lifestyle.

I feel you!!!  My goal date is 14 years till retirement. I’d be 47 and both kids will be in college. Taking on the student loan may extend that... thinking of going to a less expensive mba program that would cost me 15 out of pocket and the remainder funded by my company. 

[TomTX]

Sell the cottage. Or sell the main house and live in the cottage.

You are floating waaay to much financed lifestyle.

I feel you!!!  My goal date is 14 years till retirement. I’d be 47 and both kids will be in college. Taking on the student loan may extend that... thinking of going to a less expensive mba program that would cost me 15 out of pocket and the remainder funded by my company.

My understanding is that ROI for MBA programs is much better at the top programs.

Do your research.

[Sibley]

Sell the 2nd home. Whichever one. Boom - just got a chuck of money and freed up cash flow.

[Chrissy]

Kids are 4 and 6.

I also have $50k in a high interest savings account I could pull instead of borrowing.

WUT.  Yes, use $32k of the $50k.  That's a no-brainer.  Do not go into any more debt.

[Money Badger]

@Chrissy,   With grad school and young kids, the cottage just adds complexity to your life.   Sorry it seems like a recent purchase, but you'll find on this rather debt averse community that it's hard to justify.  It is simply amazing to feel weight off your shoulders by removing mortgages, time sucks and expenses of a 2nd property from your life.   Perhaps set aside a vacation fund of $5K or so to fund nice getaways w/spouse from the net equity if possible to feel like you didn't "lose".   You'll feel better in 3 years.

The $50K in savings is best towards completing school and as an insurance if you lose your job that funds grad school due to any number of life's little complications.   No 6% stupid school loans EVER.   Now, get some rest and kick @SS in grad school so higher income in the future makes all this a distant memory!

[better late]

Would it be possible to rent the cottage?