Optimizing Principal towards Home Loan on ongoing basis
given the current rates, I want to put in a huge downpayment to cut down on interest I pay but if I do this, in the long run, when interest rates come down, I will find a big portion of my funds stuck in the house. thats a big opportunity cost. any ideas on how to deal with this? is there any way I can take back some of the paid Principal at a later date? Edit : I see refinancing mentioned in response. Can you pls explain how that would work? suppose I initially paid 1M cash and took 500K loan to buy 1.5M house. lets say at end of 1 year, I had paid another 100K. outstanding loan is 400K at this point and I have paid 1.1M in principal. my understanding was that refinancing can only get me better interest rate or adjust loan period for 400K. Is that right? What I want is to take back, say 200K from the 1.1M I paid already and make my loan 600K. Is that possible?
Refinance
Can you pls explain how that would work? suppose I initially paid 1M cash and took 500K loan to buy 1.5M house. lets say at end of 1 year, I had paid another 100K. outstanding loan is 400K at this point and I have paid 1.1M in principal. my understanding was that refinancing can only get me better interest rate or adjust loan period for 400K. Is that right? What I want is to take back, say 200K from the 1.1M I paid already and make my loan 600K. Is that possible?
It’s a cash out refinance.
Heloc and look up velocity banking wasn't worth my time/effort but maybe you'll find it interesting
You can refinance for up to 80% of the house value, irrespective of the existing loan amount, and cash out the remaining after paying your existing loan. So in your example, you can take a 1.2M loan, and pocket 800k after paying off the 400k of the existing loan.
Refinance or heloc?