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Refinance now or sell now and buy a new home?

My wife and I currently own a 3 bedroom home that we purchased in October of 2006 for $255,000 at 6%. It was our 1st home purchase. We now have 2 children, and are hoping for a 3rd, but we are already running out of living space. We recently inquired about refinancing with both our current mortgage holder and an outside lender, and both have come up with similar plans which will save us around $400 per month in mortgage payments. Our original plan was to continue to pay what we currently pay and put the extra $400 per month towards the principal to gain more equity in the home, so we can sell faster and upgrade. Is all this planning and refinancing a waste of time?  I have seen "estimated" monthly payments on Zillow and Tulio for homes selling for over $400,000 that are lower than our current monthly payment.  Should we just put our home up for sale and start fresh with a new home?
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December 20 2012 - Hatboro
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I think you answered your own question.  Buying another home with $150K higher value for the same mortgage payment is a HOME RUN!  Refinancing is a benefit if occupancy/ownership is 3 yrs or longer, and in your case you could gain a much better opportunity i.e. low prices and low rates by "buying up" now.
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December 21 2012
Profile picture for wetdawgs
Is planning a waste of time?  not usually!

Some of the numbers you will need to work through to come to a decision are your current mortgage balance, your expected sales price, costs of selling etc.   Will this leave you in the hole?  Do you have cash to make up the difference as well as a down payment for the new-to-you house?



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December 20 2012
Greetings,

I would consider looking into whether you qualify for another loan on top of your existing mortgage, and open that "landlord" door many folks wish they could.

If you cannot and need your equity for your new purchase then I would do just that...sell and buy a nice home, taking full advantage of the extremely low interest rates.

Best wishes from So-Cal and good luck
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December 20 2012
 
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