Cash out refi question

[sae782]

Someone on my local board suggested I post this q here:

We want to replace our roof and re-side/change windows in the front of the house. Thanks to a very generous severance MH got from his last job for a year (and he had a new job for 6 mos of it), we have the cash to do the work, separate from other savings/investments. However, given how low the rates are, money is 'cheap.' We can do a cash out refinance on a 30 year and still save $300/month (if we were going to be here for 30 years in the end we wouldn't be saving, but since we only plan to be here maybe 12-15 years, we should). The plan would be to invest that extra $300-either 529 or in the market. How do we know what the 'right' choice is? We don't have debt other than the mortgage and car leases, and max out our 401ks each year and have other money in savings should we use that severance money for the work, but also never hurts to have even more cash saved.

[simpsongal]

Q: will you recoup the cost of the windows if you're only there 12-15 yrs? I have thoughts on window replacement, but it's sort of a racket (necessary at times, but still). What's the estimated cost of the project and how will it impact the value of your home?

When I looked into cash out refi, the rates offered were higher. A lot can happen in life, I'm not sure I would sign up for a 30 yr situation that would only save you money assuming you'll move in 12-15 yrs. Also, $300/mo is folding money but it's not life changing and you're probably looking to spend significantly more on these upgrades (which takes me back to whether the windows are worth it).

Could you split the difference and take out a HELOC and pay for some of the project in cash?

[madringal]

No, I would not. You’re not really saving $300/month, you’re just stretching out your loan for longer. And then paying, like, 3% a year on that money you took out for the next 12-15 years.

This is what you save cash for. Just pay for it and be done. It’s a great feeling! Also, if you haven’t refinanced and you have a rate >3.5, I would just do a refi. No cash out and lower your rate/save some money.