Mortgage Refinancing Help:

[MadWun]

Situation:

Old house now a rental property renting out at $1200
Outstanding loan balance - $98,000
Monthly payment - $1100
15 year fixed @ 3.875%
Have about 10.5 years left.

We can refi into a 30 year loan.
Payments will now be $813 monthly, but new rate will be a 4.75% fixed.
Loan balance will go up by $5000 to $103,000

This will put approximately $385 in our pockets on a monthly basis, but we are going from having only 10 years left on the loan, to now starting over at 30 years. One thing to keep in mind: It's a rental property now.

What will you do?

 

[Database Error]

I wouldn't go from a ten year loan to a thirty year loan.

 

[MadWun]

I wouldn't go from a ten year loan to a thirty year loan.

The extra $$$ sounds good, but I feel the same way.

Thanks for responding

 

[BDR]

Fam 10 years fly by quick.. Just keep the 10 yr fixed rate of 3.8%

Raise the rent $200

That's $300 in your pocket right there

 

[jagu]

No need to think twice about this. Keep the 15 year loan and even try to pay it off in 8 years, the 3.8% rate is cheap money, so going to a 30 year loan will cost you substantially more.

If you need the extra $300/mo income, increase your hours at work or cut down on an unnecessary expense and increase the rent a little.

I will be in the same scenario with my current residence when I build my new home and I've decided to keep my 3.5% 15 year loan with only 12 years left on it, to be paid off in 8.

 

[WRongKind1]

The 30 year is your true and better option. It's a rental and it will always be rental. Unless values shoot way up and you sell and profit a nice sum. But if the true plan is to past down to your kids you definitely want to do the 30 year. At the moment it, it's not a TAX LIABILITY. But once it has no loan on it, it will be a TAX LIABILITY. Ask a true accountant, not H&R Block.

 

[Database Error]

$385 X 126 = 48510 - 5000 = $43510.00 -4.75% = 41443.28 <-What the 30 year loan what get you compared to ten years.

1200 X 126 = 151002 - 1100 X 126 = $12420.00 to you until mortgage is paid off in ten and a half years. But the next 20 years 264000 all to you. $12420.00 + $12420.00 = $276420.00 ten year mortgage.


1100 X 360 = 292680 - 813 X 360 = 103320.00 to you until mortgage is paid off in thirty years.

(10.5) $276420.00 - (30) $103320.00 = $173100.00


Going to the new mortgage will cost you 173100.00 profit over thirty years.

 

[bgbtylvr]

I'd leave it alone. I have a house that rents exactly for that, and my mortgage is $1200, but I'm just letting them pay down the mortgage for me, i don't look for a profit. Why pay the higher interest rate to pocket $400. At $16K a year being paid on the home, just reapply the $100 you earn to the mortgage and the house will be paid off in 8 years. Leave that shit alone! That interest rate is good. Unless there is a refi for that rate or less for 10 years, don't fuck with it.

 

[bgbtylvr]

$385 X 126 = 48510 - 5000 = $43510.00 -4.75% = 41443.28 <-What the 30 year loan what get you today upfront every month compared to ten years.

1200 X 126 = 151002 - 1100 X 126 = $12420.00 to you until mortgage is paid off in ten and a half years. But the next 20 years 264000 all to you. $12420.00 + $12420.00 = $276420.00 ten year mortgage.


1100 X 360 = 292680 - 813 X 360 = 103320.00 to you until mortgage is paid off in thirty years.


Going to the new mortgage will cost you 173100.00 over thirty years.

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Now leave this idea the fuck on the table and never bring it up again.

 

[modified]

I'd leave it alone. Not sure if you have a no or fixed fee refi. If you don't add in transactional costs like appraisal, inspection, insurance costs, any repairs needed to fulfill underwriters requirements etc.

 

[WRongKind1]

BGOL accountants.

Keep it the way it is then.

Will not be getting them GREAT tax write offs when you pay it off. You will be paying income taxes and property taxes. And will lose that 173100.00 over them 30 years.

You better check Database Error MATH!!!

That nigga don't know his math.

 

[WRongKind1]

$385 X 126 = 48510 - 5000 = $43510.00 -4.75% = 41443.28 <-What the 30 year loan what get you compared to ten years.

1200 X 126 = 151002 - 1100 X 126 = $12420.00 to you until mortgage is paid off in ten and a half years. But the next 20 years 264000 all to you. $12420.00 + $12420.00 = $276420.00 ten year mortgage.


1100 X 360 = 292680 - 813 X 360 = 103320.00 to you until mortgage is paid off in thirty years.

(10.5) $276420.00 - (30) $103320.00 = $173100.00


Going to the new mortgage will cost you 173100.00 profit over thirty years.

I hope you don't believe these figures.

 

[Mixd]

Don't know your pockets, but if that was me, I'd be putting an additional 100-200 on top of my mortgage monthly. You can pay off the crib in 7-8 years approx.

You have to go thru another inspection and whatever repairs if warranted. Along with the fees associated with a refi or they will roll it into the mortgage, eating your equity up.

Don't make sense to me.

After those 7-8 years then it's all free money! Just continue paying taxes and insurance and upkeep.

Vacations will be nice living off that rental income or flip that loot into the purchase of another rental property.

 

[BDR]

Database error = what's today's mathematics

 

[Database Error]

BGOL accountants.

Keep it the way it is then.

Will not be getting them GREAT tax write offs when you pay it off. You will be paying income taxes and property taxes. And will lose that 173100.00 over them 30 years.

You better check Database Error MATH!!!

That nigga don't know his math.

He is paying property taxes and income taxes now too tho? He will also still be renting it out with more profit coming to him instead of the bank.

 

[WRongKind1]

Adding and paying off isn't the wise choice. We always trying to get the short term money. Work on getting your tax liabilities down. That's how you create true wealth. Go to a Real Estate Account and they will tell you.
With over 50 properties in the Detroit area (out here making a killing), I need all the write offs possible. The only house you want to keep a LOW MORTGAGE on is your personal house.

 

[simonmarcel]

Keeping working class people only thinking about monthly payments is how these refinance vultures get people(especially auto and cc). You're lowering your monthly payment but you're paying more money overall. You won't find a sane person who'd refinance with only 10 years left. By then you can keep all the rent payments.

 

[A to Dah K]

I wouldn't go from a ten year loan to a thirty year loan.

/thread
Plus higher rate and higher balance

 

[WRongKind1]

He is paying property taxes and income taxes now too tho? He will also still be renting it out with more profit coming to him instead of the bank.

I hope he isn't paying income taxes on a property with a mortgage. I hope your not paying income taxes on a property that is mortgage. Write offs, you have to think write offs. When you raise the rent $300 within the next 10 years, it will be tax free on top of the $385 that your already getting, and you still will be getting your tax write offs.

 

[WRongKind1]

/thread
Plus higher rate and higher balance

Balance goes up $5000 he said, but the payment goes down. Even with the higher rate.
Rentals are INCOME PRODUCING PROPERTIES. That's all they are. YOU WANT TAX WRITE OFFS ON THEM. Remember this word "DEPRECIATION".

 

[WRongKind1]

Keeping working class people only thinking about monthly payments is how these refinance vultures get people(especially auto and cc). You're lowering your monthly payment but you're paying more money overall. You won't find a sane person who'd refinance with only 10 years left. By then you can keep all the rent payments.

What part don't you get. Your can't keep all your rent money. It becomes INCOME and Uncle Sam wants his. All of it and some. The tax liability on rental property with a mortgage is high.
It's part of the game to keep the economy moving.

 

[A to Dah K]

Balance goes up $5000 he said, but the payment goes down. Even with the higher rate.
Rentals are INCOME PRODUCING PROPERTIES. That's all they are. YOU WANT TAX WRITE OFFS ON THEM. Remember this word "DEPRECIATION".

Oh stfu

 

[Database Error]

What part don't you get. Your can't keep all your rent money. It becomes INCOME and Uncle Sam wants his. All of it and some. The tax liability on rental property with a mortgage is high.
It's part of the game to keep the economy moving.

Well wouldn't paying off the mortgage help with this?

 

[simonmarcel]

What part don't you get. Your can't keep all your rent money. It becomes INCOME and Uncle Sam wants his. All of it and some. The tax liability on rental property with a mortgage is high.
It's part of the game to keep the economy moving.

1)You just proved you're an idiot.

2)You financially illiterate motherfucker! Another dumb motherfucker told you to never pay off your mortgage and you believed that shit. A tax write off isn't 1-1 to the amount of taxes you pay. It just reduced the amount of income you pay taxes on you trolling sumbitch.

 

[Database Error]

You financially illiterate motherfucker! Another dumb motherfucker told you to never pay off your mortgage and you believed that shit. A tax write off isn't 1-1 to the amount of taxes you pay.

Dude just told this man to pay the bank $813.00 a month for 30 years to save on taxes. I can't see the tax write-off each year being more than just one of the payments dude would save a month.

 

[jagu]

Adding and paying off isn't the wise choice. We always trying to get the short term money. Work on getting your tax liabilities down. That's how you create true wealth. Go to a Real Estate Account and they will tell you.
With over 50 properties in the Detroit area (out here making a killing), I need all the write offs possible. The only house you want to keep a LOW MORTGAGE on is your personal house.

Surely, you're not suggesting that he keeps a mortgage just for the purpose of deducting the interest expense? So, he should spend $1000/mo for the purpose of saving $200/mo

 

[simonmarcel]

Dude just told this man to pay the bank $813.00 a month for 30 years to save on taxes. I can't see the tax write-off each year being more than just one of the payments dude would save a month.

I've seen these crooks telling seniors not to pay off their mortgage so they will always have a tax write off. Why the hell would you need a tax write off if you have no income? The amount of financially stupid shit that just gets parroted by other people as sound advice is alarming.

 

[Mixd]

Dude just told this man to pay the bank $813.00 a month for 30 years to save on taxes. I can't see the tax write-off each year being more than just one of the payments dude would save a month.

I don't have a ton of rental properties, but have many friends who do.

When you have many rentals, they use the bank as leverage to stay owning 10-20 properties cause of course they don't have the money to pay them all off. It's smarter to keep it mortgaged, not use tax breaks like first time homeowner or other little tricks.

But when you have ONE piece of property, and you own it outright, there are many things you can do a lot easier then juggling twenty.

Especially if you roll it into trust, or apply for an alloidal title.

One thing no one is bringing up is what if there is a vacancy for some time or we head into another recession and the mortgage is not met?

I had a friend who lost their house like this. Was paying mortgage on a rental home in AZ and couldn't keep it up after two years when they couldn't get rents for the area to cover the mortgage. They ended up doing a short sale.

 

[Louis Koo]

if u ran a simple amort table and compared total interest paid, u would come to your senses and choke the shit outta yourself for considering a 30 year mortgage.

 

[MadWun]

Thanks for all the info.

We already decided to stay with the loan as is, and not do the 30 year, but I appreciate all the feedback and good info.

It was good to get the view point of others.

Sent from my SAMSUNG-SM-N900A using Tapatalk 4

 

[simonmarcel]

I don't have a ton of rental properties, but have many friends who do.

When you have many rentals, they use the bank as leverage to stay owning 10-20 properties cause of course they don't have the money to pay them all off. It's smarter to keep it mortgaged, not use tax breaks like first time homeowner or other little tricks.

But when you have ONE piece of property, and you own it outright, there are many things you can do a lot easier then juggling twenty.

Especially if you roll it into trust, or apply for an alloidal title.

One thing no one is bringing up is what if there is a vacancy for some time or we head into another recession and the mortgage is not met?

I had a friend who lost their house like this. Was paying mortgage on a rental home in AZ and couldn't keep it up after two years when they couldn't get rents for the area to cover the mortgage. They ended up doing a short sale.

All the more reason to pay it off sooner rather than later.

That's sounds like poor planning on their part. Their are a lot of people who think they can just buy a building anywhere and rent it out with no problem without factoring in it's location to schools, businesses, public transportation, etc.

 

[Mixd]

All the more reason to pay it off sooner rather than later.

That's sounds like poor planning on their part. Their are a lot of people who think they can just buy a building anywhere and rent it out with no problem without factoring in it's location to schools, businesses, public transportation, etc.

Wasn't like that. Was their home. Then their jobs moved them to LA and they decided to rent it cause the area was calling for rent to pay off the mortgage so they decided to keep it. After the recession, tenants became a problem to keep for the rates. They kept shelling out I think like 500 a month on top of the rent til it became too much with their jobs not sustaining. So they sold it

Both work in exec sales for major hotel chains. And things went south with even their clients.

 

[Database Error]

Database error = what's today's mathematics

Go on somewhere wit all dem damn apostrophes man. Crazy ass

 

[kew]

yeah leave it alone... I wld even throw an extra hundred at the principle every month. Then, just think in, 7 to 10 years the rent will be increased to about 1500 and all at your dispose...( think extra retirement check)

 

[luukim]

BGOL accountants.

Keep it the way it is then.

Will not be getting them GREAT tax write offs when you pay it off. You will be paying income taxes and property taxes. And will lose that 173100.00 over them 30 years.

You better check Database Error MATH!!!

That nigga don't know his math.