Housing question for the BBBC

theknowledge

With Interest rates so low should my wife and I refinance our current 4% rate, take a 2.87% IR and save on our mortgage $215mo. or should we refinance to 3.15% and take $40,000 in equity, keep our payment around where it currently is and wait for the housing market to take a shit. We currently save between $500 and $1500 a month and as I have put a pause on my home renovation projects recently I have been able to grow our savings back up to around $20,000. With the home equity loan we would be sitting on enough to buy another, nicer home when the housing market dips back down in a half year? A year? Two years? Having cash in hand mobility for market changes and a mortgage that is still very manageable seems like a good idea but so does having an even lower monthly payment. The $215 would come in handy when my wife drops shifts to teach school this fall (thanks teachers unions). What is the play here? In situations like these I always choose the wrong fork in the road. What say my money guysms?

Baseman

theknowledge said:

With Interest rates so low should my wife and I refinance our current 4% rate, take a 2.87% IR and save on our mortgage $215mo. or should we refinance to 3.15% and take $40,000 in equity, keep our payment around where it currently is and wait for the housing market to take a shit. We currently save between $500 and $1500 a month and as I have put a pause on my home renovation projects recently I have been able to grow our savings back up to around $20,000. With the home equity loan we would be sitting on enough to buy another, nicer home when the housing market dips back down in a half year? A year? Two years? Having cash in hand mobility for market changes and a mortgage that is still very manageable seems like a good idea but so does having an even lower monthly payment. The $215 would come in handy when my wife drops shifts to teach school this fall (thanks teachers unions). What is the play here? In situations like these I always choose the wrong fork in the road. What say my money guysms?

Where is your house and what's it worth?

theknowledge

Arlington.
Worth $385,000
We owe $237,000

RaceBannon

I your payment is lower than rent then keep it but take the equity for the looming crash. And there will be one. Which means you might want to sell now and pay rent while waiting

BennyBeaver

Depends on your long term wants. Do you like where you are? Kids ages? Too many unknowns here to give good advice and I wouldn’t expect you to share all that stuff here.

ATBS, the interest rates won’t get much lower, it makes sense to take advantage of them if you see yourself staying in the same house for 10+ years.

theknowledge

RaceBannon said:

I your payment is lower than rent then keep it but take the equity for the looming crash. And there will be one. Which means you might want to sell now and pay rent while waiting

We thought about that but you can't rent anything proportionate to what we have for what we pay right now. Our house would rent for 500-700 more than what we pay in mortgage currently. It's crazy, but true. The equity is where we are leaning. If we could afford that beach house in two years while keeping the Arlington house for a rental that would be ideal. The last time the market crashed we weren't in a financial position to capitalize. I don't want to miss the next time the tide goes out or be $15,000 short of buying something amazing.

theknowledge

BennyBeaver said:

Depends on your long term wants. Do you like where you are? Kids ages? Too many unknowns here to give good advice and I wouldn’t expect you to share all that stuff here.

ATBS, the interest rates won’t get much lower, it makes sense to take advantage of them if you see yourself staying in the same house for 10+ years.

The house is adequate. We have property, the kids liked their school, but the acre we have is on a hill and as I get older running compost down a steep hill and back up is more work than I would like. I'd say I have 10 years max physically left in me to take care of the property the way I like it to look. If I could skip out and upgrade sooner I would.

BennyBeaver

theknowledge said:

BennyBeaver said:

Depends on your long term wants. Do you like where you are? Kids ages? Too many unknowns here to give good advice and I wouldn’t expect you to share all that stuff here.

ATBS, the interest rates won’t get much lower, it makes sense to take advantage of them if you see yourself staying in the same house for 10+ years.

The house is adequate. We have property, the kids liked their school, but the acre we have is on a hill and as I get older running compost down a steep hill and back up is more work than I would like. I'd say I have 10 years max physically left in me to take care of the property the way I like it to look. If I could skip out and upgrade sooner I would.

Sounds like you need to put the kids WORK!

MikeDamone

This forum is making me realize people here are poorer than I thought.

Baseman

RaceBannon said:

I your payment is lower than rent then keep it but take the equity for the looming crash. And there will be one. Which means you might want to sell now and pay rent while waiting

Yes, pull the equity. No, don't sell. Good price point house. Invest the cash in the market. Look for high ROE and lower PE. Baseman loves banks and insurance companies @ the moment. Bank of America and Travelers. Berkshire Hathaway is a screaming buy. It doesn't pay a dividend but if you understand the company, including the stock portfolio, Buffett is still getting north of 20% ROE.

theknowledge

MikeDamone said:

This forum is making me realize people here are poorer than I thought.

Yes, I am poor. You think I make a bunch of money stacking cans? It really is my job. No joke. This is probably going to be one of my only good opportunities to get a return on my one large investment.

theknowledge

Thanks for the advice everyone. We were leaning towards taking the money. I just needed an affirmation because I'm not a smart man and I have a tendency to take the wrong fork in the road. Much appreciated gentlemen.

Baseman

theknowledge said:

MikeDamone said:

This forum is making me realize people here are poorer than I thought.

Yes, I am poor. You think I make a bunch of money stacking cans? It really is my job. No joke. This is probably going to be one of my only good opportunities to get a return on my one large investment.

Don't buy a bigger house. More tax. Higher utilities.

If you like Arlington, stay with what you have or buy a foreclosure w your equity, fix it up and rent your current home. YW.

theknowledge

Baseman said:

theknowledge said:

MikeDamone said:

This forum is making me realize people here are poorer than I thought.

Yes, I am poor. You think I make a bunch of money stacking cans? It really is my job. No joke. This is probably going to be one of my only good opportunities to get a return on my one large investment.

Don't buy a bigger house. More tax. Higher utilities.

If you like Arlington, stay with what you have or buy a foreclosure w your equity, fix it up and rent your current home. YW.

Yeah, I'm going to take the money and sit on it. We save about $12,000 a year and have 20k in our money market currently. The market will come back to me in couple years and when it does we will buy something that fits the size of our family a little better and rent the Arlington house. That's now the plan. Thanks @Baseman, @RaceBannon, @BennyBeaver I appreciate your input.

YellowSnow

MikeDamone said:

This forum is making me realize people here are poorer than I thought.

I remember my not being able to buy a house in Arlington for cash phase.

Pitchfork51

I don't like living in the same place for more than 2 years

godawgst

Baseman said:

RaceBannon said:

I your payment is lower than rent then keep it but take the equity for the looming crash. And there will be one. Which means you might want to sell now and pay rent while waiting

Yes, pull the equity. No, don't sell. Good price point house. Invest the cash in the market. Look for high ROE and lower PE. Baseman loves banks and insurance companies @ the moment. Bank of America and Travelers. Berkshire Hathaway is a screaming buy. It doesn't pay a dividend but if you understand the company, including the stock portfolio, Buffett is still getting north of 20% ROE.

If you take out Apple, hasn't Berkshire trailed the market for the last 1/3/5 years.

Freepuka

theknowledge said:

With Interest rates so low should my wife and I refinance our current 4% rate, take a 2.87% IR and save on our mortgage $215mo. or should we refinance to 3.15% and take $40,000 in equity, keep our payment around where it currently is and wait for the housing market to take a shit. We currently save between $500 and $1500 a month and as I have put a pause on my home renovation projects recently I have been able to grow our savings back up to around $20,000. With the home equity loan we would be sitting on enough to buy another, nicer home when the housing market dips back down in a half year? A year? Two years? Having cash in hand mobility for market changes and a mortgage that is still very manageable seems like a good idea but so does having an even lower monthly payment. The $215 would come in handy when my wife drops shifts to teach school this fall (thanks teachers unions). What is the play here? In situations like these I always choose the wrong fork in the road. What say my money guysms?

The slight difference in rate won’t make much of a difference. I would take out the cash but invest in something.

I’m not sure we will see a housing crash anytime soon though. We would need a LOT more supply to fill the demand and I don’t think there is enough new construction and resales to create it.

If you don’t have a “mortgage guy”, I am one of said guys.

UW_Doog_Bot

I think the housing crash is over hyped, though maybe not in WA. Too many investors looking to put cash into a stable investment vehicle just like what you are doing.

Do you really want to be a landlord?

QE will probably keep equity prices afloat. A market index will minimize your risk and probably make you good money as prices come back. Better than betting all your money on one horse.

Diversify, Diversify, Diversify

FireCohen

UW_Doog_Bot said:

I think the housing crash is over hyped, though maybe not in WA. Too many investors looking to put cash into a stable investment vehicle just like what you are doing.

Do you really want to be a landlord?

QE will probably keep equity prices afloat. A market index will minimize your risk and probably make you good money as prices come back. Better than betting all your money on one horse.

Diversify, Diversify, Diversify

Primarily all equities, with good chunk in cash just so that I don’t have to sell my equity position. Early thirties, got couple of cycles in me before retirement