Need some home refi advice

[Superwhdm]

Hey gents, I could use your worldly wisdom here.

We began down the road of a cash out refi to eliminate some debt and get a shop built. Long story short-

We built the house nearly 4 years ago and had 20K equity the day we moved in.  Fast forward a few years and with the knowledge that our area is a hot spot for growth-we decided to try and refi. 

We filled out everything and then it was the appraisal that was the keystone.  Well it appraised for the same thing it did when we moved in.  Right, NO appreciation what so ever.  It’s not like we let the house go to shat.  In fact Ive put a lot into it. 

I am fighting this because the coms the appraiser chose were terrible. I pulled some myself that, to me, made sense that we should appraise at least 40k more than it was.  All the mortgage company said was sorry we cant do anything. So we are out 600$ for the appraisal and they wont even consider the proof we found ourselves.

We have good friends in the multi million dollar club of real estate.  They all say that is absolute nonsense.

Any thoughts here?  I am currently waiting for a response from the mortgage company from our last correspondence regarding the fact the we feel we didn’t get a fair shake.  I mean the appraiser lived over an hour away. How could he know our area. The company was suggested highly to us ny some family friends.

[cudakidd53]

Find someone local to refinance through - they know the area, are tied to the area etc.  If not, don't refinance and tie new debt to your house; go with outside/stand alone financing for the other stuff.  Sucks being out $ for something you didn't get worth from; chalk it up to learning and move forward from the bum deal.  Good luck - pray over your next course of action as well!

[Flyin6]

OK, so I am going to be the unpopular one with this advise

Do not refinance

THis long term debt keeps you in shackles, for a long time.

It adds more to your balance. You get say 30K cash and pay 50K-60K for the privilege of using it.

You pay a myriad of fees which are really just trumped up as a mechanism to collect more money from you

You are restarting the clock on a very long payoff period. Another 20-30 years. And during that time you will be aging. Aging in the American context means you will get laid off or purged for some reason simply because your failing health becomes a burden to companies who care not about you. When that happens and suddenly it always does, you will be in a bad position and may well lose the house and everything you put into it.

Best course of action is to make extra payments on the home, like all the time. I always pay extra on my mortgage for my primary house, and I paid cash for my farm, owe nothing.

If you have a 30 year mortgage at say 5% and are say 8 years into that, some argue you might cash out a little, then go for a 20 year or a 15 year mortgage. WRONG!!! Just more fees, more to repay. Best to just pay extra on the principal and that 30 year term is automatically turning into a 27 year, 25 year, 19 year mortgage.

If you need a outbuilding and your home is appreciating, then sell your house and move to a place with a barn. Buy something even a little rundown, enter it with a low mortgage, make extra payments and use your youth to rebuild it. When disaster strikes in the future you will be in a much better position to possibly save everything you did the last X number of years.

[Flyin6]

If you need extra money for a shed, then create it! Go earn it. Be creative and do a side business, sell something, invent something, partner with someone who is bright, and give more. Giving begat heavenly giving.

But the bible also tells us to be satisfied with what we have, bor God provides all that we need.

Fighting that urge is a hard one. Something I have not done well with over a lot of my life. Buy, buy, buy. I had to get older and buggered up in Afghanistan and set on my financial butt to finally wake up. Now if I want something and I do, I want to supply my wife's income to her so she can come home and stay here. So I am devising a plan to make more income. If I am successful, she will get to come home. If now, we will be satisfied in our station in life.

Just some wisdom to consider.

[Superwhdm]

Don-1000%. Ill say this.  Sometimes Gods greatest gifts are unanswered prayers.  This was certainly one of them. I weld on the side and Im currently searching for opportunity there.  I have a great job and am payed well.  We were looking at a quicker way forward and didn’t look deep enough into what it truely costs. 

DW and I were just talking about how her parents (retired) cant afford to do what they want because of refinancing and credit card debt. We dont want to be like that.  Looking at it now, I dont want to add debt.  Id much rather work and earn it somewhere else.  We aren’t at a place where we have sell our soul to continue. We are doing just fine and it will get better.

Personally I am releaved and see it for what it really is.  A blessing.  Thanks guys.

[stlaser]

The only time I refinance is if I can save a couple percent (not sure what the math says but this needs to be a positive for me long term) and or am trying to lower my years to pay off if I plan to live there for sometime. That stated I’ve done it twice over 3 homes and 18 years. Once was a much better interest rate along with cutting the mortgage from 25 to 15 years and other time was simply going from 20 to a 15 year but the second one was an internal thing with my bank and not a bunch of BS fees, just a couple hundred extra a month.

Ok, so once you agree refinancing only has two positive uses which I just outlined above there is another option. It’s called a home equity, I personally make more than the 4% interest or whatever they charge on a HELOC on my invested money. Normally you have to be in a home for 6 months to a year to apply for one. The rates are much better than many other forms of credit and your local bank is who you see for this.

My suggestion would be a mix of the HELOC and what Don stated. Use HELOC to pay off debt, then use it to build shop. Make extra money, use the equity to your advantage not to just satisfy wants etc.

[TexasRedNeck]

Cash is king.  Don't pay people for the privilege of using their money if you can help it.  Get people to pay you for the right to use your money (invest)

More people are made millionaires by real estate so if you are in an appreciating area, stay put unless the taxes grow as fast as they do here in Texas.

Which brings me to my other point.  If you refi for a much higher number, it is possible your appraisal disrict will adjust your tax base and that just makes the deal that much more crappy.

Delayed gratification is a powerful ally.  Save up and pay cash as you go to build it.  No debt and you have maximum equity for your labor