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*Look away Dave Ramsey enthusiasts* -- Buying Bronco with cash out home refinance?

Bronco4lyfe85

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I agree with you... up to a certain extent. Enjoy and reward yourself but plan for security in the long run by making good financial decisions. The line should be drawn where you are living within your means or if you go beyond that, you put that security at risk and can easily end up as a greeter at a big box store when you are 70 instead of enjoying your retirement.

TLDR; Don't use your home equity to buy a vehicle, especially not a recreational vehicle
Oh I agree, don’t be reckless. I’m frugal hut spend a lot of money on my passions. But i’m also set up to have my house paid by the time i’m 60 so it’s working out.
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Spooled

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A lot of info in this thread. Safest and most conservative play would probably be this:

I'd take out the 40k in equity, YOLO it into $TSLA calls/puts (depending on your stance) and use those sweet tendies to get the Bronco in cash and pay off your condo.

/s
I thought I stumbled into r/wallstreetbets for a second after reading this :ROFLMAO:
 

Texas Sunshine

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What's scary is this isn't that far fetched of a prediction... I bought a new Mazda 2 in 2012 and financed most of it on a 5 year loan. That felt like forever, I can't imagine the 7+ years they have now. I don't regret financing that car at all because of where I was in life (also was 0% interest) but I will never finance a car again.
I'm okay with 0% because it's using their money at no cost to me. I agree, I won't finance a car either.
 

Markubis

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I bought a house 2 years ago at 4.5% and just refinanced at a rate of 3.0%. We added our newer cars loan onto the refinance because it was around 6% and we were paying almost $94 per month just on interest alone.
Now we have a mortgage that is lower than it was previously PLUS we have all of our cars paid off.
Of course, come next summer, the new car that just got paid off is being traded in on the bronco because we'll get more trade in value with it being only one year old.
 

North7

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I bought a house 2 years ago at 4.5% and just refinanced at a rate of 3.0%. We added our newer cars loan onto the refinance because it was around 6% and we were paying almost $94 per month just on interest alone.
Now we have a mortgage that is lower than it was previously PLUS we have all of our cars paid off.
Of course, come next summer, the new car that just got paid off is being traded in on the bronco because we'll get more trade in value with it being only one year old.
So your rolled your "newer cars loan onto the refinance" and "we have all of our cars paid off", does that mean you just extended your car payments out for 15 or 30 years?
 

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Dmk08

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I'm okay with 0% because it's using their money at no cost to me. I agree, I won't finance a car either.
I would never buy a vehicle I couldn't write a check for but that doesn't mean that is the smart choice. If the rate is anything under 3% Ill finance 90% of the vehicle.

Why would I lay out lets say $50k cash thats making me 10%+ in a simple Vanguard Index fund and put it into a depreciating asset.
 

Markubis

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So your rolled your "newer cars loan onto the refinance" and "we have all of our cars paid off", does that mean you just extended your car payments out for 15 or 30 years?
I guess you could say it that way. But we also don't plan on living here 15-30 years either.
 

JH1026

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I highly doubt he's looking to refi on a 15 year. On a $200,000 house, going from 120k to 160k you'll be paying almost $60,000 on that $40,000 vehicle at 2.875% on a 30 year. And the $900 you would be saving doing a 15 year @2.5% as opposed to 5.95% on a 7 year auto loan would be quickly eaten up by closing costs. No matter how you spin it, taking equity out of your house to buy something that adds zero value to your property is a terrible financial decision.
 

North7

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So many kneejerk reactions in this thread from people who don't understand finance. If he's really only going to be paying another $25 a month, even after 30 years that's only $9K total for the $40K he's taking out now.
Yes, some of us don't understand finances at all, that is why we have a paid off houses and very comfortable savings and retirement accounts.
The other option is to do the refi and don't take out any money at all, which might lower the monthly mortgage payment enough to cover the payments on the Bronco. This wasn't an option for me because I didn't owe enough on my home to get a lender interested in that small of a loan.
THIS, is a smart move, as long as you do not extend your term.
This is a big decision, though. And nothing personal, but I would not trust it to the advice of a bunch of people I don't know, who are all prepared to lay out an ungodly amount of money on a vehicle they've never driven or even seen (and yes, I count myself among them).
NickP asked for our advice, we will give it to him and he can weigh his options. But I would never trust the advice from those of use paying cash for our Bronco, we of course don't know what we are talking about, and no, I will not layout money on my Bronco until I've seen and driven it.
 

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North7

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Of course if your home costs as much as your home in California your property taxes in Texas would be higher ?

Your home in Texas would have to be about half the price of your home in CA to have an approximately equal property tax.
@zaki, I see another point that may have confused you, in Texas we don't have state income taxes, but in reality, the amount I pay in Texas property taxes is about the same as my California property taxes and California income taxes were combined.
 

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If I lived in an apartment for the next 35 years (70) at $1,200 a month (Colorado) I would spend 504K and have nothing to show for it.

Or I could just pay for my house for the next 24 years with 1 extra payment a year and spend 500K with interest and be 60 with no rent or mortgage and have something that’s worth 400K+ in my back pocket.

For fun $1,200x12x24= 172,800 saved over 24 years.

60 till I die at say 80 = $0 in mortgage or rent.

60-80 renting = 144K

So I saved 28K and own nothing.

Sell house when dead so family gets 400K+ in cash for themselves.

You can use the same math on all the other living expenses. Why didn't you? You are trying to prove a point that is not there. Yes, buy a house and pay the mortgage. Rent if you have a debt roll addiction and keep increasing the mortgage because you cannot control your spending habits. Seems I've been clear, you're just not reading.

By your logic, you should not have a phone, water, power, cable, nor insurance. They are also living expenses and you get nothing at the end of 30 years of use. However, you do get to use them while paying. Not everyone can own a home for some reason or another. What you are telling millions of people is that they are dumb because they rent. What I'm saying is that rent is not a mortgage, nor is it debt.
 

Bronco4lyfe85

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You can use the same math on all the other living expenses. Why didn't you? You are trying to prove a point that is not there. Yes, buy a house and pay the mortgage. Rent if you have a debt roll addiction and keep increasing the mortgage because you cannot control your spending habits. Seems I've been clear, you're just not reading.

By your logic, you should not have a phone, water, power, cable, nor insurance. They are also living expenses and you get nothing at the end of 30 years of use. However, you do get to use them while paying. Not everyone can own a home for some reason or another. What you are telling millions of people is that they are dumb because they rent. What I'm saying is that rent is not a mortgage, nor is it debt.
I could also add in rent is market dependent and is ever changing. Your point is idiotic and no you’re not clear, you make zero logical points. Where did I say everything in life that isn’t tangible value is worthless? Some things you have to actually pay for. You also said nothing about renting “if you’re bad with your mortgage.” Nobody was talking about that.

Your rebuttal is utilities and required insurance have no value? Of course they don’t unless you need that insurance to save you. Or they aren't necessities unless of course you want to sit around in the dark and shit in a bucket because your toilet doesn’t work.

Renting is never a smart venture and is a giant waste of money. Buying a home is an investment, renting is an investment in throwing your money away.
 

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The more I read these types of threads, the more I realize how much financial education is lacking in our society.

#1 - Love the title of the thread. Really hits the root of the topic.

#2 - It's not a HORRIBLE idea, though there is likely a better one. It's about rates, and terms. There's a reason why car salesmen ask how much you can afford a month - They can get you to spend more by paying it off longer.

#3 - Mortgage and car loans are pretty close in the rate right now. Only reason you would do the mortgage route is because you want to pay less per month - the car salesman trick. At that point, you're trying to stretch your finances to buy a vehicle that you otherwise cannot afford. Otherwise, why would you use mortgage instead of a car loan?

#4 - Debt it a tool - think a chainsaw. Used wisely, you can accomplish some really great things like cutting down a huge oak tree. Used poorly, you can chop off a hand. I put everything on a credit card and pay it off every month for the points. I will always carry a 24-30 year mortgage (at these current rates) because I can invest the money and get a higher rate of return (over that time frame).

#5 - Ramsey is great for those with lower financial literacy because he simplifies complex topics - Debt = Bad. But what about....? No, Debt = Bad.

#6 - Unless you are planning on selling in the next 3 years, you need to refinance now.
 

Cheshire

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Anyone looked into doing this? Probably not the most financially savvy thing ever... but with how low rates are and how much home prices have gone up I’m kinda considering it tbh. I could basically have my mortgage go up $25 a month and pull out $40k or so with how rates are currently. And at 3.5%ish interest that’s going to be better than any deal on financing the Bronco most likely. Of course I would do this and pay a lot extra on the mortgage to pay it down early. Would just be nice to have lower monthly obligations.
Check out Hometap.com

You can take out equity on your home without any payments or interest. It's like selling a small piece of your home. A couple companies started doing this several years ago and it seems interesting. Worth checking and great if you don't want higher/more payments.
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