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I swore I'd never do a cash out refi, then my roofer quoted me $19,400
I always figured a cash out refi was just a fancy way to turn my house into a credit card, so when my roof started leaking over the garage in Fort Worth, I planned to just save up for two years instead. Then I did the math on a 15 year refi at 6.2%, and pulling $25k out only bumped my payment by about $210 a month, which is way less than what I was throwing at the leak plus a HELOC quote. Am I missing something dumb here, or is the closing cost the only real gotcha people should be watching for?
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the_lucas4d ago
That "closing cost is the only real gotcha" line is close but it's not the only thing. The big one you're not thinking about is that you're resetting your whole loan term, so even if the payment only goes up $210, you just added years of interest back onto whatever you already paid down. Run your payoff date now versus after the refi, because that gap can quietly cost more than the roofer quote. Also check if you're anywhere near 20% equity, since a cash out can push you into PMI you weren't paying before. And shop the title and appraisal fees hard, those are the ones that move around the most between lenders. If your break even on the closing costs is under two years and the roof is a real need, not a want, then the math you did is solid.
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