I know this may be a touchy subject, and not something that everyone wants to talk about. It’s like that big elephant in the room. I felt the need to bring it up, because I have seen this to be a bigger problem lately. I have always been a supporter of pulling an equity line or refinancing in order to remodel, buy another investment property, etc. Basically, you should refinance to use the money to get a return on your dollar. Obviously, another good reason to refinance is not to pull money out, but to refinance into a better loan product. Please don’t refinance to buy a new car, take a trip, buy some fancy furniture, or anything else that does not bring you more money than you had. You will regret it in the long run.
The subprime market has been the hot topic in the media lately, and with good reason. However, there were people who were already in good, fixed loans, and refinanced when the rates were cheap in order to free up some cash. Basically, if you do this, you are essentially borrowing your profit from your home in advance. When you decide to sell your home, you now think that you have a small profit, but your perception is wrong. You would have had the huge profit, had you not refinanced and used the money ahead of time.
With the market not going up 15-20% per year like it used to, people are now seeing that they may have pulled equity out, that they now are very close to netting zero on the sale of their house. Even worse, they may have to sell for less than the house is worth. You never know what life situation may come up, and you may need to sell your home. Make sure you ask your Realtor for a net sheet if you are thinking of selling your home.
Melissa Casciato
(415) 490-7998
www.buysellSFhomes.com
melissa@buysellSFhomes.com
Filed under: Real Estate
