Current 15 yr mortgage - should I refinance to 30?

[Chip Clark]

I moved out of my previous house and am now using it as a rental. My plan at the time was to quickly pay off the house since it was my primary residence, so I opted for a 15 year mortgage. There is currently a little less than 11 years left on it. Now that I have a tenant in the house, I have been thinking of refinancing back to a 30 yr mortgage for cash flow. The current situation is a negative ~$100 per month of cash flow, but the principal is being paid down quickly. The refinance will be about a $550 swing, so a positive cash flow of $450. Because I bought the house at the peak in 2005, I paid too much by today's market. So there is no cash to take out with the refi. This would be strictly for cash flow. Also, my current interest rate is 3.125%. The 30 year rate would be 3.75%

What would you do? Take the cash flow to reinvest or let the principal drop quickly?

[Ronan M.]

Depends on your personal situation. Do you need this property to cashflow now or have you other sources in income (W2) that pays your day to day living expenses.

Go online with a mortgage calculator and if you refi back to 30yrs just look at what this is going to cost your over the life of the loan. That might make you think twice.

If you do refi and diligently use that extra cash flow to save and invest that's fine. But if you use that extra cash flow for car payments, vacations, beer and steaks I think that is a very bad move.

If you have a decent source of income now and don't need the extra cashflow you will have a free and clear asset in 11yrs and you are on the gravy train.

Much of this depends on your own personal and financial situation.