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Home Improvements (cash-out refi) or New Build?

1,043 Views | 3 Replies | Last: 2 yr ago by SteveBott
Silvertaps
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AG
Wife and I have been going back and forth on deciding to either build a new house in the same neighbor we're in now, or update our current house (cash-out refi). We probably need a financial advisor at this point, but thought I'd put it our their on this forum to get some other thoughts.

We bought our current house in 2017 as a spec in the Prosper/Celina area north of Dallas.
- 2017 Purchase: $418k / 3500 sqft ($119 per sqft)
- Current mortgage: $300k / 3.8% / 30 year
- Current house comps: $170 - 190 per sqft ($595k - $665k)

The floorplan we've picked out is $700k-ish and we're trying to keep as close to the same payments as we currently have, but a lot has to go our way (rates still low 2 months before closing, our current house sells around the above comps, etc). They can't start building until November, so we couldn't lock in a rate till around June. I'm learning selling into a sellers market, then turning around buying back into it is certainly a difficult thing to do. The hope here is there isn't a huge markup with the builder the way resales have been selling.

If it's decided there is just too much unknown in building, then we may do a $100k refi, then turn 100% of that cash back into our current house (walk-in shower in guest bathroom, outdoor kitchen, extended patio, fire pit).

Of course a third option is do nothing...but what fun is that?

Bob Knights Paper Hands
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Option 4:
    Sell home
    Move into a van for 12 months and put all of your home money on OA stock picks.
    Buy a $1.2 MM home with that money
    Sell van
    Put van money in McFly yolos.
Diggity
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AG
we were considering doing something similar (moving somewhere else in town) but my relatively low assessed value on my current home was going to make moving an expensive proposition.

what is your assessed value right now? You'll have to assume the assessed value on your purchase will equal your purchase price so there will likely be a significant delta there. Then factor in the cost and PITA factor of listing, purchasing and moving. Even with a discount broker, that's likely going to be in excess of $35K when it's all said and done.

Essentially, even if I could have kept my mortgage amount relatively the same, the excess tax on the purchase was going to add about $450/month to my PITI. Insurance would have gone up as well.

In the end, the costs and hassle of moving were more than I wanted to deal with for the upside of being in an area I preferred, so we're going to update the flooring and bathrooms.
htxag09
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AG
Heloc?

Wife and I would like to move to a little larger house and bigger lot. But we laugh at the the thought of tripping our mortgage, which is what it would take to stay where we want.

We just applied for a heloc and our going to do some renovations we've been wanting to. We know we will be "over building" to an extent but don't care. If we're going to stay here for another 10 years, we want to do it how we want, regardless of what we get back. It also helps that we bought 9 years ago and it's appreciated by around 50%.
SteveBott
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AG
I can run numbers but for that much cash and low rates now it might make sense to do a new mortgage. My contact info is in my profile
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