Cash-out refi only 1.8% 15 year fixed

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Submitted by gzz on July 20, 2021 - 8:20pm

Why not borrow at 1.8% and put in tax free muni at 4%?

For 250k, net tax-free income is $5500 per year. Very little risk. Muni fund’s price could decline, but they generally don’t and would need to decline a lot.

Submitted by an on July 20, 2021 - 11:23pm.

Ooh, where can you get 1.8% for cash out refi 15 years fixed? The lowest I can see on zillow is 2.875%.

Submitted by gzz on July 21, 2021 - 7:06am.

Zillow. Are you doing 15 year sfh owner occupied 300k+ and under 50% ltv?

Submitted by scaredyclassic on July 21, 2021 - 7:24am.
Submitted by an on July 21, 2021 - 7:44am.

Just reran on zillow (15 years SFR primary, no cost) and assuming $1m property with current balance of 200k and cashing out 250k, current rate I see is 1.99%. If I change current balance to be 500k, rate goes to 2.25%. The only way I can get 1.875% is to do no cash out and have LTV @ 50%.

Similar parameter but with 30 years and we're looking at ~ 0.625% higher. So, 50% LTV with no cash-out is 2.5%.

I refi in February this year @ 2.5% in a 30 years fixed. So, rate is back to where it was earlier this year. I'm waiting for the 30 years to hit 2.25% to refi again.

Submitted by gzz on July 21, 2021 - 10:39am.

My timing was worse, i locked when 10 year was 1.6, now 1.3.

Probably I will do the cashout and muni plan in 2-3 months if we drop another .1.

Keep in mind tax rev is gushing in so the supply of new gov bonds is way down v 2020.

Submitted by gzz on July 27, 2021 - 12:11pm.

AN: I tried again, current balance 260k and cashing out 200, and I got 1.875% with no points/fees.

Popping it up to 250k out showed the same offer, plus one with a lower APR (1.75% + fees that bring it to 1.80%).

If I grabbed the no-fee 250k cash out offer, the interest on my cash out would be $4687.50 the first year and the EVM tax free Cal muni would pay $10,600, resulting in an after-tax gain of $5912.

It seems that the very best rate is with a 285k cashout, which has a 1.875 rate with $700 lender credit. Going a tiny bit higher to 290 causes the rate to go up to 2.25%, so there seems to be some threshold balance of around $545k that greatly increases the rate.

Submitted by gzz on July 27, 2021 - 12:13pm.

An even more conservative rate arb would be for me to use the 1.875% cash out to pay down my 3.625% investment condo mortgage.

Big question on this is whether the cash out interest would be tax deductible like the current loan is.

Submitted by an on July 27, 2021 - 6:44pm.

gzz wrote:
AN: I tried again, current balance 260k and cashing out 200, and I got 1.875% with no points/fees.

Popping it up to 250k out showed the same offer, plus one with a lower APR (1.75% + fees that bring it to 1.80%).

If I grabbed the no-fee 250k cash out offer, the interest on my cash out would be $4687.50 the first year and the EVM tax free Cal muni would pay $10,600, resulting in an after-tax gain of $5912.

It seems that the very best rate is with a 285k cashout, which has a 1.875 rate with $700 lender credit. Going a tiny bit higher to 290 causes the rate to go up to 2.25%, so there seems to be some threshold balance of around $545k that greatly increases the rate.


Weird, I just ran it again on Zillow with property value of $1m, current balance of $260k, $200k cash-out, SFR primary residence with 15 years fixed and no point/fees and lowest I see is 1.99%. I guess rate must have gone up today.

The current conforming loan limit is $548,250. So, as long as your new loan amount is less than that, you get the best rate.

Submitted by gzz on July 28, 2021 - 10:55am.

So much for "extended conforming" that I thought was like $750k here.

I was doing property value of 1.3 but I don't know if that makes a difference. On my refi they put $999,999 and waived appraisal. I am also using zip 92107.

Here's what I see now, still showing 1.875 no fee, but worse than yesterday when there was a $700 credit.

https://i.imgur.com/8JhN0J4.png

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