We're in the middle of a cash out refinance on our home and my husband is pushing hard for us to increase the amount we are taking in order to pay for a new roof. The original plan was to consolidate an interest only home equity line of credit that we opened when we bought the home (80-10-10) with our existing primary mortgage. Because of the way we used the heloc since opening it, the refinance is considered a cash out (wish I had known that). Still new interest rate will be 2.625 for a 30 year fixed.
We'll need a new roof eventually (say in the next 5 years - we've been patching small leaks here and there for years) and the interest rate is good. We can go up to 60% LTV on the same terms (we have a lot of equity) and take an extra 25k, which would increase our payment by about $100/month, but our new payment would still be 100s less than our existing combined payments.
We are already taking about 12k out due to a quirk of our escrow account - we have to pay the full taxes and insurance to the new mortgage company upfront because the due dates are so soon but our current mortgage holder hasn't paid them yet. Our current mortgage company will then refund us the existing escrow account (part of the 12k referenced above). We intend to use that for a new-ish car next March.
I'm having a hard time with this. Yes, the arguments he makes are good - low interest, improve house, necessary update eventually, new payment still less than existing payments - but I hate the thought of taking on more debt. We make good money, real good money now, but we are constantly struggling with it. We spend it like a firehose at times. If it matters we can easily afford the higher mortgage payment according to the income/debt ratios; we just have spending problems elsewhere.
I don't know if I even have a question here. Maybe does anyone think increasing the mortgage 25k is a good idea? Knowing my audience I suspect I posted on this website for a reason, but if a lot of people say you'd be a fool for not taking money at 2.625% I could be persuaded. I mostly use this forum for help in resisting / delaying spending. So many inspiring people! If we save our money we could pay for a new roof with cash in a year - if we even need it then.
Money is hard, y'all!