"T" <tpollard7[at]hotmail.com> wrote in message news:<ZEcVb.27898$QJ3.276[at]fed1read04> ...

- quote -

payments on another $10,000 of debt in 5 years?

If you sell the house you will probably pay a 6% commission on the
whole value. Plus whatever money you need to put into it to get "top
dollar or quick sale".

Good Luck,
Speednxs

I'm about to do a refi cash out to plug up some holes in my monthly cash
flow and eliminate some debts. I've done a half dozen refis in the past so
I'm pretty familiar with what's out there, but the new loan I'm considering
is different from anything I've done before and I'd really appreciate some
advice from you gurus.

My situation is a little complicated, so here goes: I own two homes, one in
a small California town that has been "discovered" as a ski and destination
locale. My house there is appreciating [at] 30%/yr with no end in sight at this
point. I have 100K equity right now. It's on a 30 year HELOC [at] 3.75%
interest only. My other home is in a city that has just started it's boom
phase. I've owned the home for two years and now have 75K equity there. That
loan is a conventional 30 yr fixed [at] 5.875. I can access 52K from home A in
CA with 80% LTV and 28K [at] 80% LTV in home B. I have 13K in CC debt [at] 5.9%
and 2 loans on my life insurance poilicies (whole life) [at] 6.4 % totalling
25K. The smaller of the two policies will pop in 2007 whether I pay that
loan back or not. The larger policy with the larger loan won't pop for at
least 14 years unless I pay off that loan, in which case it will pop in 5
years. My premiums for the two are alomst $500/mo. Currently I'm paying
$350/mo on the CC, which is a fair bit more than the minimum. My car payment
is over $550/mo and I am shopping for a refi on it, since I don't think
paying it off would be the wisest use of the proceeds from the new loan. I
still owe about 13K on it, and have less than 2 years left on the note.

The new loan I'm looking at is a cash-out refi 5/1ARM based on the LIBOR [at]
2.2% on house A. If I do a no cash out, the rate's 1.95%. I'm thinking of
doing the cash out loan on House A, using those funds to pay off the CC
debt and at least the loan on the larger policy, or maybe both loans on the
life ins. I'm thinking of doing a no cash out loan on House B, which would
lower my payments from over $1200/mo to under $800/mo. The mortagage on
house A is negligible right now, about $400/mo and the new cash out loan
would increase the monthly to $700. But the drawback is that these loans are
NegAms and I'd wind up owing an approximate additional 10K on house A at the
end of five years. If the appreciation remains constant, the gain would far
outstrip the increased debt. I know that a NegAm is a gamble and I am
willing to play to a certain extent, but I'm in unfamiliar waters here and
want to make sure I don't get in over my head. On a monthly and annual basis
I'd be ahead of the curve for a few years, free up my cash flow and have
funds available to purchase a rental property. On the down side, there's
always the chance that the bubble may burst and I'll wind up owing more on
the property than I started with. I'm fairly confident that the appreciation
will continue, since everyone's been saying "this can't keep going up" about
the house A town for the last 15 years. And it's only been the last 3 years
or so that the skyrocketing appreciation's been happening. I anticipate
House A to be worth 500K in five years. House B is appreciating at about
12%/yr and there's no reason for it to stop. This city is going the way of
L.A. San Diego and Sacramento, where the property values are still going up
and have been for 20+ years. I intend to hold the properties indefinately,
since I'm basically sitting on a couple gold mines.

Any advice would be greatly appreciated. As I said, this type of loan is new
to me, and although I've researched the LIBOR and it is very stable overall,
I'd like to hear from those more experienced. The rates are very attractive
but I just don't understand how I'd be making P&I payments from the get-go
and still wind up with a larger debt on the property than I started with. My
loan agent can't seem explain it to me to the point where I understand it. I
don't want to be in a position five years from now where I'll look back and
say "What the hell was I thinking?" Thanks for all your wise advice.