Should we refi with cash out for imorovements now?

Question

I am 72 and my wife is 71. We owe $68K on the house we live in here in Augusta, GA---a market with sustained growth from Ft. Gordon, the NSA headquarters, the Cyber Command, and the Cyber Center for Excellence. The house is worth $202,900 as is and would be worth about $249,900 ARV.

Right now we have a 6.25% fixed-rate loan that will be paid off in 10 years. Our current equity is $134,900. If we were to refi $100K at 3.25% for 15 years, our payments would go up slightly (from $950 to $1,100) and our equity would be about $150K. (We have an IRS lien that will be paid off in four years and I am pretty sure that could be worked around.)
My wife is hell-bent on being able to "burn the mortgage" as soon as possible and is resisting refinancing with a $30K cash-out to drastically improve the functionality, curb appeal, and comfort of the home we've lived in for 35 years.

I feel we should do the refi, make the house new again, and enjoy where we live. If my position is correct, what is the best way to convince her to go along?

By the way, should the title be in her name, my name, or both?

Karla Simmons · Answer

@Bert Dean

Have you scratched out what your payment would be if you do a re-fi for an improved rate and get the the cash out that you want for improvements? Sounds like your wife wants to be mortgage-free, which I can understand at 70+ years old, but if the new mortgage payment will be reduced enough to make life a little more comfortable, she might be in agreement.

Justin Melendez · Answer

@Bert Dean At a minimum I would refi for a better rate. You shouldn’t be paying 6+% while everyone else is enjoying sub 3%. I’m also in the Augusta area, give me a ring and I’d love to strategize with you two.

Bert Dean · Answer

Thanks!

David Kelly · Answer

Shop the rates/fees on this type of situation with other lenders. Since you only have 10 years left, you need to determine if it will be worth it or not. I am sure it will be with your current rate being so high, but make sure you break down the numbers. let me know if you have any specific questions!

Steve Vaughan · Answer

Welcome to BP, Bert.

I'd at least refi for a better rate. 15s are like 2.375% now.

I'm not thrilled about optional improvements with sky high material and labor prices right now, but yes, improve your home when things settle.

As far as vesting title, my wife and I 'own' separately, but we are in a community property state and want to burden our credit available as little as possible. Owning individually after 35 years plus getting your wife on board to the refi idea at all is just noise IMO. Table it.

I'd start with a rate refi why and apply. Cash out question can be bridged later.

Should we refi with cash out for imorovements now?

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