The art of refinancing

[Evan Ernst]

I'm looking for some advice on refinancing. I have a $661k loan on a 2 family property in Brooklyn that I planned on holding for 5-10 years (what I expect will maximize the growth of the neighborhood and value of the property). I did a 30yr fixed a year and a half ago for 4.125%. With the rates down to about 3.625% for the same loan, I could refinance and pay off the cost in about 2 years and then pocket an extra $3,300 a year on the property. A lender, however, is suggesting that a 7yr arm for a 30 loan would be far more valuable. It would certainly save a lot of money (around $9-10k a year I think), but my concern is getting stuck in a high interest rate market and being unable to sell.  Is it worth the risk? He suggests people refinance an awful lot, and as an investor, my next question would be will I want to refinance in a year or teo anyway to pull out more cash on the increasing value of the building to invest it elsewhere like a new property? I'd like to learn more about the art of refinancing, what vehicles are better and how to play the game. I am mainly looking to acquire buy and hold properties for equity and some cashflow with more cashflow down the line. The 2 family seemed a good place to start but eventually I assume I will want to be in the 3 family or above market for the sake of additional rent rolls. I'd love to learn more if anyone can point me in the right direction.