Refinancing

[chuckvvv]

I want to refinance our home so we can get a new car. Has anyone done this lately? I want to do it before the rates decide to increase. Tips or pointers would be great.

[ehubbard]

The Bernank will make sure rates don't increase. Why dont you ditch the new car and save some money for your future.

[Tannhauser]

Originally Posted by chuckvvv

I want to refinance our home so we can get a new car. Has anyone done this lately? I want to do it before the rates decide to increase. Tips or pointers would be great.

If you believe the rates are going to go up, why would you borrow more money? unless you mean you want to get a fixed-rate deal before any increases hit.

[markievicz]

you want to refinance your home in order to purchase an asset that depreciates at light speed.


This makes no sense to me.

[Aurik]

Refinancing the home makes sense -- makes a lot of sense. Generally if you can save 1% or more in interest you'll save in the long run (remember, there are closing costs and the like to worry up front). My wife & I refinanced last summer and went from a 25-year note (20 years remaining) at 5.8% to a 10-year note at 3.375%. Our payments went up somewhat, but we also cut our remaining time in half and now we're paying LOT less in interest.

So if you're planning on refinancing the house, I'd seriously consider refinancing to a shorter term note where your payments will be about the same as what they are now. Generally the shorter the term of your mortgage, the lower your interest rate is going to be.

Now if you're planning on refinancing for a lower monthly payment and using that saved cash to buy a car, that does make sense. However, if you are planning on refinancing with cash out to buy the new car -- DON'T. Why would you want to finance a car (which will depreciate rapidly over the first 2-3 years) and finance it for the same term as your house?

[BendtheBar]

I wouldn't refinance to purchase something that has a decreasing value like a car. I would take the extra money and pay down debt, or use it to make extra payments on the home itself.