Money Monday: Cash Out Refinance

I’m having a major freak out because I’m in the early stages of getting my place ready to sell. The tenants have been given notice. I sold one of my beautiful velvet couches last weekend. Stagers and painters will be submitting bids soon. I was mentally prepared to make this the focus of my life.

Now the curve ball.

The reason I moved forward with selling my place is because I couldn’t refinance it. The last appraisal came in at an abominable $400,000 even though I paid $455,000 for it. I tried again last October with a different broker who guaranteed no fees and no appraisal cost. After the appraisal, I never heard back from the guy. I called, I emailed, nada. I figured the appraisal must have sucked again.

But miraculously, the company called me yesterday asking for a status since the broker I had been working with left the company. That’s why I hadn’t ever heard back. Looks like my appraisal came in at $500,000. It dawned on me (after clearing my mind and meditating for 10 minutes last night) that I should go for a cash-out refinance which will pretty much solve all my problems.

1. I won’t have to sell.

2. I can extract some of the equity in my home and use that for my next down payment.

3. I can reduce the rate and shorten the term to 20 years.

4. In 20 years, this is going to finance our retirement!

Chasing the Low Refi Rates

I am trying to refi my place. My last refi was unsuccessful because the appraisal was low which put me underwater, which was upsetting because I don’t believe the comps supported such a poor price. So I am at it again. An appraiser came today and I’m very curious what his thoughts are. As a serial refinancer, my appraisals have spanned $400k through $600k. I swear if this doesn’t go through I’m going to sell my place and wouldn’t be surprised if I pulled in $550k which is $100k over what I paid for it. I’ve locked in a 3.5% rate for 20 years.

I constantly go back and forth on whether or not to sell my place.

I always think that if I hold on for 20 years when it’s completely paid off that we’ll get an extra $1,500 / month which is net of property taxes, HOAs, utilities, bills, maintenance, etc. What a nice extra cushion for us to retire on. But holding on means being a landlord which takes time, and time is money! Also I seem to clash with the owners on how to spend our reserves. I think we need to have our backyard completely landscaped, but at least one of the other owners disagrees. It is such an eyesore, no one wants to spend time back there, yet it has so much potential. Sigh.

And if I sell? Freedom! And a big chunk of cash back in our pockets.

I’m very confused.

Check out this graphic from my real estate agent. SF condo prices. Can I say…BUBBLE!