Jumbo loan?

[HardDrive]

Wife and I are about to refi. We want to cash out some $$$ for a home improvement project, prolly around $150k. All of the cashout money would go into the house.

Zee problem is that there is $417k conforming limit, we owe around $350k, so we would only come home with about $58k from a conforming refi. Thats not enough cashola. We could cover the additional cost with cash, but we REALLY don't want to that at the moment. We could scale the project back, but only to about $100k.

We have both been sour on the idea of jumbo mortgage, but now were looking at it seriously. Rates are in the low 6s. That sucks when one looks are conforming loans, but historically, that actually pretty cheap money, yes?

Even with the cash out, we would still be less than 70% loan to value.

We are starting to think jumbo might be the way to go.

What say yea?

[GH85Carrera]

Wow that must be a big home improvement project. I presume this is the house you plan to live in for a long time. You must be VERY sure about your job or income stream.

[red-beard]

I would get a conforming loan, then go for a second for the rest. Your interest on the second will be higher, but plan to pay that one down quickly. Consider an ARM for the second. You want to do the conforming loan first, to get the rate down as low as possible.

Today is the day to get that loan.

[HardDrive]

Yeah, its looking like we will probably be here another 5 years (if not forever). We love Seattle, love our neighborhood. Job situation looks solid (knock on wood, no one can see the future....).

The project is big, but it is sort of the the last piece to make our house done. Its includes a highend kitchen, a new mudroom and a new front porch.

[911Rob]

something like that I'd say pay cash or dont do?
350K mortgage isn't big enough?

I work with mortgages all the time, so I'm not pointing any fingers here; but when I borrow that kinda cash with payments, it better be making me money! The last time I borrowed $200K from the bank, I invested it for a couple years and more than doubled my money..... paid back the $200K and earned $500K profit.

I'm renovating a 3800 sqft home right now....... 100% new flooring, new trims, baseboards, all new paint including ceilings, new appliances, new counters, new plumbing fixtures, yadda yadda...... "cash".

two canadian cents worth, hope it works out for you.

[Rick Lee]

What's your house worth? That's the issue here. Add up your current loan payoff, closing costs and the $150k you want to cash out and see what % of your home's value all that equals. I don't know what current HELOC guidelines are. But you probably need to stay below 90% LTV.

[Rick Lee]

Also, consider a rehab or construction-perm. loan IF that $150k will get your dollar for dollar in added value to the house.

[Steve Carlton]

Maybe talk to Craig's broker/Credit Union?

The Super Conforming limit looks to be $567,500 in King County, which base out only about 0.25% higher than Conforming, but the cash out adjustment looks a lot uglier. There's several price adjustments based on LTV and FICO on both loan types. You should compare those to a $417,000 1st & 2nd combo and a new 2nd on top of what you have now.

[TheMentat]

Originally Posted by red-beard

I would get a conforming loan, then go for a second for the rest. Your interest on the second will be higher, but plan to pay that one down quickly. Consider an ARM for the second. You want to do the conforming loan first, to get the rate down as low as possible.

Today is the day to get that loan.

Assuming the decision to renovate is already made, and you're simply evaluating financing options, this might be the best route.

In Canada, things operate differently, so I can't be sure, but it seems to me that setting an artificial dollar limit to "loan conformity" would necessitate some more creative financing schemes. Your mortgage advisor (or any finance guy) should be able to work through the available options to find you the lowest cost of borrowing.

[Netspeed]

Originally Posted by HardDrive

Wife and I are about to refi. We want to cash out some $$$ for a home improvement project, prolly around $150k. All of the cashout money would go into the house.

Zee problem is that there is $417k conforming limit, we owe around $350k, so we would only come home with about $58k from a conforming refi. Thats not enough cashola. We could cover the additional cost with cash, but we REALLY don't want to that at the moment. We could scale the project back, but only to about $100k.

We have both been sour on the idea of jumbo mortgage, but now were looking at it seriously. Rates are in the low 6s. That sucks when one looks are conforming loans, but historically, that actually pretty cheap money, yes?

Even with the cash out, we would still be less than 70% loan to value.

We are starting to think jumbo might be the way to go.

What say yea?

Contact RandyP here on the board. He's in the loan biz and in your state too.

[HardDrive]

Originally Posted by Steve Carlton

Maybe talk to Craig's broker/Credit Union?

The Super Conforming limit looks to be $567,500 in King County, which base out only about 0.25% higher than Conforming, but the cash out adjustment looks a lot uglier. There's several price adjustments based on LTV and FICO on both loan types. You should compare those to a $417,000 1st & 2nd combo and a new 2nd on top of what you have now.

I saw that too. Loan to value is the killer. House is worth $750k+. So over $490K (70% LTV) its seems like your rate really takes a hit. Currently looking options for a $417 primary, and a heloc for the rest. Rates are good at the moment (they will stay that way forever, right? )

Thanks for the input guys. I will be sure to share the before and after photos of our kitchen.