What options do i have when I do a cash out refinance?
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Will I be taxed Capital Gains if I receive cash-out from the refinance of my primary residence?My primary residence is in Fl, and my wife and I have lived in it for over 2 years. I plan to refinance later this year and cash-out about 100k in order to remodel my home. Will I be responsible for capital gains on the cash-out?
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October 30th, 2009 at 9:09 am
Auto finance is what I do for a living and the answer is yes you can access the equity in your vehicle by refinancing it.
One of the things car loans are based on is the loan to value, if your $15,000.00 back of Kelly Blue Book you should have no problem getting at least $10,000.00.
The reason I say this is banks use N.A.D.A. not Kelly and they go by loan or wholesale value not retail.
The best time to have done this was when you bought the vehicle, but you should still be able to do it.
October 30th, 2009 at 9:23 am
with the present crisis and everything up in the air who knows — everyone is awaiting guidance — suggest you test the waters and approach your local bank and see what they say first hand!!!
October 30th, 2009 at 4:21 pm
You should use your savings as long as it doesnt completly empty your account. Because you want to keep aprox. 3 months total bills in savings account at minimum. But if you can have that much leftover then go with the savings..
Otherwise.. Home equity line or as they call them "piggyback loans"
October 30th, 2009 at 9:41 am
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October 31st, 2009 at 4:40 pm
When you refinance it doesn't really matter what the county assessment is. The company that is working your refinance will send out their own appraiser. County assessments doesn't take into consideration any work you've done to the house like new room, new a/c, etc. The appraiser will walk around the outside of your house, measure it for sq footage and ask you some questions. How old is the roof, have you had any major improvements, etc, etc. Then he will look to see what the houses in the area are appraised at. He could probably give you a rough estimate but you won't know for the true number is until he reports back to the company.
November 1st, 2009 at 3:46 am
You have to wait until you're on title, which usually takes a month, but, yeah, you can refinance any time you want to as long as you don't have the prepayment penalty.
November 1st, 2009 at 10:10 pm
You can do that. If you can handle the monthly payments you should just apply that huge payment to your existing mortgage. Look at the full amortization table and see how many years you'd shave off of your mortgage by doing that. It will be substantial! You could own your home YEARS earlier by keeping the same payment and just applying that lump sum to your current mortgage balance!!
good luck!
November 2nd, 2009 at 1:45 am
Thank God for your relative you are a lucky person! You have no idea how hard it is to get a mortgage these days. I know because I am trying to get one! You by pass all the mumble jumble of perfect credit score (above 700 Fico), 20% down (lower than that they charge you PMI) plus a good solid income. You said she is giving you a low interest rate, I just wonder how low? If it is a lower than 4-6% I just wonder: why do you want to refinance? It may not be any lower in the future judging from the inflation and the economy today. However, if you do wanted to pay her off due to unforeseen further circumstances, she has filed a first lien on the house, the answer is YES! It is POSSIBLE you can refinance the loan from a bank. Here are the things that need to happen: The real estate market turn around and you can use the equity of the house as down payment; you continue to have a good credit rating (if not, repair it ASAP), a good solid income; and your relative can provide (or you keep all cancel checks) a good record of your payments and don't forget and a few thousand dollars of closing cost like points and application fee, tax etc. I hope it helps.
November 2nd, 2009 at 3:35 am
Benefits-
FHA.may qualify him.
FHA rates are good right now.
FHA allows cash out with few restrictions.
The Tax Write offs on the closing costs, MIP and future interest payments.
Lowering his rate will lower his monthly payment on his existing principle balance. The extra cash out will be at a good fixed interest rate and the interest costs should be tax deductible. The cost of the upfront MIP should also be tax deductile under the current tax codes.
If I needed the money, low cost, fixed interest rate money is always a great option.
The Negatives:
More and more lenders are adding risk based fees on borrowers with low credit scores. (580 or less)
Edit: Lisa L is correct- FHA guidlines will allow cash out up to 95% on some property types; on others, mobile homes for example the most you can borrow in a cash out refi is 70% ltv depending on it's year of manufacture and condition.