With interests on their way back down, I'm considering a refinance soon. I own a rental property in Texas. I used some online calculators, and assuming I used them correctly I could be saving anywhere form $120 to $100 a month. It's not a lot, but it does add up over the 28 years left on my mortgage. Plus, it would increase my monthly cash-flow. (I'm locked in for 30 yrs at 6.5%) Has anyone done a refinance before? Are there any hidden fees that I should be wary off that might make the deal less enticing? Do people usually pay the fees cash, or roll them into the refinance? If the economy keeps going downhill, could it be possible for rates to go down even more? Any info is helpful, thanks and
from what ive seen/heard 6.5 on an investment property is pretty solid. how low of a rate are you finding?
I refinanced about 4 years ago from a 30 year to a 15 and lowered my interest rate to 4.8%. The costs were pretty nominal (maybe $2,000) and I rolled them into the loan. My payment went up slightly, but I went from owing 25 more years to 15 years.
just locked in for a refi of our home -- 5.675% for 30 year fixed was quoted. We went with a different product though.
Ironically, today is the refinance closing date for a piece of rental property that I own outside of Memphis, TN. I have a home equity (interest only) line of credit against my primary residence in Austin. After I cut a check for the investment property, I have it refinanced. I include this info because when you own a property outright, it makes the refinance process a lot smoother, so there may be some bumps that you as a non-outright owner encounter that I may not be aware of. I am by no means a real estate expert or professional; just an investor. In my case, there are some hidden fees, but nothing huge, and I promise you some are negotiable. The mortgage broker fee is undoubtedly the most negotiable. The broker will approach you with something around 1.00%, but will often take 0.75% or less. If you know an attorney or appraiser, you can save some there as well.
you will basically have the same fees that you had when you purchased the home, but with a small discount on the title policy if you bought in the last 7 years. picking a random current principal balance of $100,000, your payoff would be closer to $101,000 when you roll in the 30 days interest and if the closing costs are 3K then you could have a new note of 104K. so do you still save $100 per month with a payment on 104K over 30 years at a lower rate vs your current 100K payment for 28 years? if the #s work out that you would owe 104K for the transaction, you can choose to borrow the entire amount, just pay the costs out of pocket and keep the principal the same, or even put more money down to reduce principal and lower the payment even more. your choice, assuming you and the property would qualify for the higher amount.
oh, and i think its reasonable to expect the FED to cut rates another .25 when they meet again in late jan/early feb which should lower the mortgage rates some more. might be worth the 3 month wait. a good website to track rate trends and general mortgage info is mortgage101.com
just confirmed, the cash-out refi on that investment property is going to get us a 6.375 on a 30 yr fixed.
Long, if you do not mind. How much is the property worth vs. what you owe? That will play a large role in the rate as will doc type. I am a broker, if you want some free info send me an email with contact info and I will help in any way. good luck
niner, bought the place for $250K. Currently owe just under $195K. The property is probably worth more than the $250K as my taxes have gone up every year. Haven't had it appraised recently but the current price shouldn't matter for the refi, right?
there was another thread on here that got me to my broker a few weeks back -- both for our rentals and our primary residence. I love this board.
Long, The value is important because it helps the lender gauge the level of risk. Example, if you owe 200K and the property is worth 200K, the lender would be lending 100% of the value making it higher risk. sent you a pm.