Should I refinance???

[Jeff Howard]

Hello,

Just getting started in my REI education and I realize my first "deal" needs to be to make the best decision with our primary residence! We bought a town home in Ladera Ranch (Orange County, CA) at the PEAK in 2005 for 535K, put 20% down, and took out a 5/1 ARM amortized over 30 years., which adjusted very favorably, and is now at 3.25% and our payment is $1900. We owe 322K on the loan. I talked to my loan agent at BofA (don't worry I will shop around), and he said he could lock me in at 3.75% on a 30 year fixed, $3000 closing costs, which would give me a payment of $1500 per month, a savings of $400. We plan on buying a new home in 1-4 years, depending on what the market does and how long we can keep our sanity in our small home with three growing boys (4,6,and 10)! I plan on renting our town home once we move, with approximate rents for the home at $2500+ (zillow rent estimate $2800). This would make the home only carry a very small negative cash flow, and I would plan on keeping the home as a rental until the home is paid for. I don't see any real downside to re-financing at this point as long as the tenants are paying for the increased length and interest of the new loan. Thanks in advance for any input on the matter!

Happy investing!

Jeff

[Jerry Padilla]

@Jeff Howard

Have you thought of doing a cash out refinance as well? You will have a slightly higher interest rate, but on s primary single unit, you can pull out up to 80% LTV.