refinancing

[disneysteve]

Yes.

Mr Ramsey hates all and any debt. Correct me if I'm wrong, but I think that it's okay to get a mortgage by his standards, but it has to be the 15 year variety.

Yes, for your primary residence he says a 15-year loan with a payment not exceeding 25% of your monthly income.

For investment property, however, he says no debt at all. Pay cash or don't buy it.

Not saying I necessarily agree - just passing along his advice.

[y26]

I just wanted to update this post. My new year resolution was to call BOFA about refinancing my investment property. So yesterday i spoke to a mortgage person at my local branch. Based on the information he can see i would be eleigible to re-finance under Making home affordbale. Now,they use a home evaluater program which i think over valued my home. I have to question him more on that. Anyways these were the options i was given to refinance. I have 23yrs 6 mos left on current loan at 7%.

233,000 loan (roughly)
15yr 4.375 P.I.T.I 2237.00
25yr 4.75 1805.00
30yr 4.75 1691.00

Now the number above are estimates. Payment may even be lower considering the escrow money i have already and how that gets allocated.

My rental income total is 2274.00.

Now I'm honestly thinking about selling in the future. So if i look at 15 yrs ammortization the balance would be at the end of 2013 around 208,000. I think that would offer me the best result in selling.

What is everyone thoughts?

[Slug]

The 15 yr is razor thin on your profitability. Losing a tenant for even a month could start a cascade of problems. The other loans offer more flexibility and more opportunity to have cash on hand in the event of an emergency or fixing it up to sell it in the future.

Just my .02

[graceful]

The 15 yr is razor thin on your profitability. Losing a tenant for even a month could start a cascade of problems. The other loans offer more flexibility and more opportunity to have cash on hand in the event of an emergency or fixing it up to sell it in the future.

Just my .02

ITA. My choice would be the 25 year loan. A lot can happen BEFORE you sell and you want that cushion.

[myrdale]

I am in the process of refinancing right now, hopefully closing Friday morning. So I am in a bit of a different boat than you but I am feeling some of the same effects.

Five years ago my house appraised at $108k when I purchased it. Two weeks ago it was $68k. I have been blessed and I have paid it down to $52k, but when they included they rolled the closing cost into the mortgage, it put me below the 20% equality of the home's appraised value. Luckily it is only a matter of about $2k that I will just pay at closing to avoid PMI.

It just really struck me that there are a lot of people out there who could profit so much by refinancing but can not because of how much home values have dropped.

I just have to believe that it really would be in your banks best interest to allow you to refinance from the stand point of negating risk. If you have a lower payment on the debt you already owe to them, it would be much easier for you to make the monthly payment and thus much less of a risk to them of you defaulting on the loan.

EDIT

For your last reply, I personally am of the opinion of going for the longest term possible to provide the lowest payment, again helping to negate risk. You then have the ability to save that money or pour it onto the loan. Again I have completely different circumstances than you but my payment including escrow stands to drop from about $780 to $370 per month. That's $400 additional I will have to pound away at the remaining principle. With the mortgage being the largest and only truly fixed cost in my budget it in effect doubles the size (or rather length) of my emergency fund. And lastly if I were to loose my job, I could afford the house payment working at McDonald's. (That is to say I would not have to have a job making $xx,xxx per year to pay my mortgage.

Lastly I have to believe that prices will go over the next few years. Between inflation and population growth, I have to believe prices will rise again.

[y26]

Thank you for the response everyone. Just an update I went with 25yrs. Also received my credit score 814 and 811 for my wife. Signed the documents now a wait and see. Maybe march but he is hoping for February closing. I guess lots of people refinancing. Making Homes Affordable made it happen...

[autoxer]

Thank you for the response everyone. Just an update I went with 25yrs. Also received my credit score 814 and 811 for my wife. Signed the documents now a wait and see. Maybe march but he is hoping for February closing. I guess lots of people refinancing. Making Homes Affordable made it happen...

I'm in the middle of the process also. Didn't even need an appraisal, and I know I'm underwater. Thanks Obama!

[amarowsky]

im curious, because I have definite interest in renting out property in the future if the situation presents itself to me. How do you run your property and market and manage your tenants? Do you use a property management company, do it your self, or a mix of the two?

[y26]

I manage my own properties. I have a 3 unit 3br each. Several resources available for tenant screening but i just use an applicaion and interview. I have been lucky with consistent tenants so i have not had to search much. Capital in the bank is a must for repairs and things like that.

Most likely when the market corrects itself i will get out and sell it.

For applications and things like that i just did a landlords forms search on google..