To refi 10 yr or not? - 4 unit - Los Angeles

[Robert Hooks]

Hello,

I have a question about a situation I am in and I am trying to weigh the pros & cons.

I currently own a property that has approximately 25 years remaining on the 30 year fixed loan @ 4.375%.

Current payment is $2789/month. Over the remaining life of the loan I will have paid around $350k in interest .

*IF* I am able to refinance to a lower rate in the mid 3's by moving in and doing an owner occupied 10yr fixed loan, what are the benefits, or what math should I be running from the investment standpoint that would help look at the benefits/risks of the leave it alone scenario vs refi? Also are there any tax benefits to paying it off earlier?

With the refi I would only pay somewhere around $90K in interest.

The property is a 4 unit that currently carries itself if two of the units are rented.

Any thoughts or strategies on how I should be evaluating this, or if I should be thinking about using the cash flow as it stands another way, would be much appreciated.

Best,

Rob

[Ray Johnson]

@Robert Hooks I think you should be looking at this as over the years your tenants will be paying the $350k in interest and not looking at it as if you're paying it. If you're doing this right, the business entity/Asset is paying the Interest from its business operations, not you.   

I say move into the property for the 12+ months to satisfy the Owner occupant requirement for the one year then lease that unit out, and ride the new lower rate out for the next 30 years.

After the one year OO timeline you can get the DTI hit off your books since the property cash flows and the income will cancel out the Debt hit if it's good enough.