Re-fi back to 30 yr terms on rental homes?

[Joseph Agins]

I'm wanting to re-fi about 8 SFH rentals to take advantage of lower rates. Have owned them for varying amounts of times. Some just a couple/few years and others much longer. Trying to determine if I should just 30 yr terms on all of them to maximize cash flow? Hate rewinding the clock but thinking I should. Or no?

[Jason Wray]

Joseph,

I would advise taking all (8) using a 30 Year mortgage for a few reasons. Your going to reduce your overall DTI especially on paper for the banks/lenders. You also have the luxury of paying more when you want to but are not obligated to pay more with a 30 year. You can always pay more or larger lump sums here and there but still have the luxury of a more manageable debt obligation each month. I tell my customers why force yourself to pay a 15 or 20 year payment when you can select a 30 year for the comfort and pay more when its convenient.

You also have to cover yourself for the "What if factor" meaning stuff happen all the time.  COVID for example that put a damper on some people right...  So would you rather be holding a 15 year note or a 30 year note on your rentals during this crisis?

The other thing is take a 30 Year but make the 20, 15, 10 year payment again when you can but if the ship hits the wall your only obligated to pay the 30 year!