Loan options for secondary house.

[Martin Cozzi]

Hi,

I am under contract for a secondary residence and have been given the current options:

4.625% .5% discount point. Lender fees are $995 commitment fee (underwriting), $895 processing, $500 appraisal.
4.75% no points. Lender fees are $995 commitment fee (underwriting), $895 processing, $500 appraisal.
4.875% .5% lender credit. Lender fees are $995 commitment fee (underwriting), $895 processing, $500 appraisal.

The house is for ~235k, with 10% down.

I plan on putting this house up for short-term rental when I am not around.

The difference between 4.625 and 4.875 is essential $31 a month.

The 4.625 option means I have to spend an extra $1000 up front and pay for all fees. 

The 4.875 option means "free" appraisal. So the difference really is $1500 right now costing me ~12k over 30 years..

Knowing I plan on renting it out part-time, would you recommend that I invest the extra $1500 in renovations to make the house more appealing to renters, or that I eat up the cost but "save" 12k over 30 years?

[Matt Steele]

I think it really depends on what you can get for renting, the positive cash flow you receive for renting and how much "more" you could charge if you invested the $1500 to make the property more appealing.

Looks like your Monthly Mortgage will be any where from ~$1080-$1250. 

So it really depends on your goals too. Do you want the temporary rent to contribute the Mortgage payments for the year? Pay down principal with extra cash?