- Joined
- Jan 7, 2021
- Messages
- 568
Hoping to get some advice from the financially inclined or mortgage pros here.
We are looking to build a new home in a nearby subdivision. They require 15 percent down payment to start construction. To get this amount of cash, we are debating on tapping into our current homes equity. The home would take about 10 months to complete, so we would be using these funds until we list the house next Spring/Summer.
Researching HELOCS the idea of withdrawing only what you need seems attractive. You can make interest only payments which would be around 300-400 bucks a month after we use what is needed to start the build. We would keep our current low rate on our mortgage which sounds good, but then have two payments. The APR fluctuates also with HELOCS each quarter, right now it is at 4.5 percent. That part concerns me a bit as well.
Cash out refi seems straight forward. We would do either a 3/1 or 5/1 ARM since those rates seem to be around 4 to 5 percent. Our monthly payment wouldnt change much at all (currently in a 15 yr loan) while we would get the cash needed, so that part is nice. I believe this option would require some closing costs so that would eat away some of those funds. Also we are essentially resetting the loan, which I guess wouldnt matter since we are leaving in 10 or so months.
What I am not sure of is how either option impacts our credit and ability then to close on our new loan for the TBB home. We dont want to do the dreaded 'double move', would rather get the new build complete, then list the current home. Maybe we could get lucky enough to have the closing dates for both in sync? I dont want to count on it though.
Appreciate any advice or feedback you have patriots!
We are looking to build a new home in a nearby subdivision. They require 15 percent down payment to start construction. To get this amount of cash, we are debating on tapping into our current homes equity. The home would take about 10 months to complete, so we would be using these funds until we list the house next Spring/Summer.
Researching HELOCS the idea of withdrawing only what you need seems attractive. You can make interest only payments which would be around 300-400 bucks a month after we use what is needed to start the build. We would keep our current low rate on our mortgage which sounds good, but then have two payments. The APR fluctuates also with HELOCS each quarter, right now it is at 4.5 percent. That part concerns me a bit as well.
Cash out refi seems straight forward. We would do either a 3/1 or 5/1 ARM since those rates seem to be around 4 to 5 percent. Our monthly payment wouldnt change much at all (currently in a 15 yr loan) while we would get the cash needed, so that part is nice. I believe this option would require some closing costs so that would eat away some of those funds. Also we are essentially resetting the loan, which I guess wouldnt matter since we are leaving in 10 or so months.
What I am not sure of is how either option impacts our credit and ability then to close on our new loan for the TBB home. We dont want to do the dreaded 'double move', would rather get the new build complete, then list the current home. Maybe we could get lucky enough to have the closing dates for both in sync? I dont want to count on it though.
Appreciate any advice or feedback you have patriots!