cash out refinance a cash flowing property
Member since 2020 · 12 posts · 2 votes
Does anyone have experience refinancing a rental property to cash out refi a cash flowing property, only to turn it into a non cash flowing property after increasing loan amount from cash out?
property as follows:
currently 13 years into a 30 year mortgage (17 years remaining). piti 1550/month. loan amount 180k. 3.75% interest rate.
Looking at option to cash out refi and pay 11k in points to bring it to 2.75% 15 year loan with 85k cash out. new loan amount 290k. piti would be 2250
current rent = 2250
looking for cash to pay down a few small debts and have downpayment for another property to be purchased in 6-12 months.
do have option to sell as well while still relative peak prices, but will cost roughly 50k in taxes + commissions and fees. would net roughly 200k from sale.
does it make sense to cash out refi in this scenario or sell in a vacuum?
Does anyone have experience refinancing a rental property to cash out refi a cash flowing property, only to turn it into a non cash flowing property after increasing loan amount from cash out?
property as follows:
currently 13 years into a 30 year mortgage (17 years remaining). piti 1550/month. loan amount 180k. 3.75% interest rate.
Looking at option to cash out refi and pay 11k in points to bring it to 2.75% 15 year loan with 85k cash out. new loan amount 290k. piti would be 2250
current rent = 2250
looking for cash to pay down a few small debts and have downpayment for another property to be purchased in 6-12 months.
do have option to sell as well while still relative peak prices, but will cost roughly 50k in taxes + commissions and fees. would net roughly 200k from sale.
does it make sense to cash out refi in this scenario or sell in a vacuum?
Paying 11K in points is extreme. Depending on the current value you can get around the same rate and pay off some additional debt which will lower your total outgoing payments. It sounds like your home is worth roughly 450K so at 60% LTV you'll be able to get a loan for approximately 270K. Get a 30-year fixed and pay the 15 yr. payment if you really want to go that route.
You have options which is great.
I hope this helps and have a good one.
Does anyone have experience refinancing a rental property to cash out refi a cash flowing property, only to turn it into a non cash flowing property after increasing loan amount from cash out?
property as follows:
currently 13 years into a 30 year mortgage (17 years remaining). piti 1550/month. loan amount 180k. 3.75% interest rate.
Looking at option to cash out refi and pay 11k in points to bring it to 2.75% 15 year loan with 85k cash out. new loan amount 290k. piti would be 2250
current rent = 2250
looking for cash to pay down a few small debts and have downpayment for another property to be purchased in 6-12 months.
do have option to sell as well while still relative peak prices, but will cost roughly 50k in taxes + commissions and fees. would net roughly 200k from sale.
does it make sense to cash out refi in this scenario or sell in a vacuum?
Paying 11K in points is extreme. Depending on the current value you can get around the same rate and pay off some additional debt which will lower your total outgoing payments. It sounds like your home is worth roughly 450K so at 60% LTV you'll be able to get a loan for approximately 270K. Get a 30-year fixed and pay the 15 yr. payment if you really want to go that route.
You have options which is great.
I hope this helps and have a good one.
thanks for response. Yes home is worth roughly 450k at the moment. Do people actually go back to 30 year terms when only 15/17 years left on mortgage? Seems like with amortization it was finally starting to work in my favor (paying more principal each month than interest).
11k seems extreme to me as well, but if i plan on holding 15 years and paying off the note, the 11k would be worth it after about 36 months (as opposed to paying no points and 4.5% for 15 years).
shoot me a message, happy to speak more about this with you! I work on a team that does over a billion dollars a year in financing, definitely some insight I provide.
Does anyone have experience refinancing a rental property to cash out refi a cash flowing property, only to turn it into a non cash flowing property after increasing loan amount from cash out?
property as follows:
currently 13 years into a 30 year mortgage (17 years remaining). piti 1550/month. loan amount 180k. 3.75% interest rate.
Looking at option to cash out refi and pay 11k in points to bring it to 2.75% 15 year loan with 85k cash out. new loan amount 290k. piti would be 2250
current rent = 2250
looking for cash to pay down a few small debts and have downpayment for another property to be purchased in 6-12 months.
do have option to sell as well while still relative peak prices, but will cost roughly 50k in taxes + commissions and fees. would net roughly 200k from sale.
does it make sense to cash out refi in this scenario or sell in a vacuum?
Paying 11K in points is extreme. Depending on the current value you can get around the same rate and pay off some additional debt which will lower your total outgoing payments. It sounds like your home is worth roughly 450K so at 60% LTV you'll be able to get a loan for approximately 270K. Get a 30-year fixed and pay the 15 yr. payment if you really want to go that route.
You have options which is great.
I hope this helps and have a good one.
thanks for response. Yes home is worth roughly 450k at the moment. Do people actually go back to 30 year terms when only 15/17 years left on mortgage? Seems like with amortization it was finally starting to work in my favor (paying more principal each month than interest).
11k seems extreme to me as well, but if i plan on holding 15 years and paying off the note, the 11k would be worth it after about 36 months (as opposed to paying no points and 4.5% for 15 years).
Just remember that you can control how much you pay every month. If you lose income or something negative happens you still need to pay that 15 yr. note. You can also get a note that is 17 years if you wanted to as this is something that has come to the market in the last couple of years. A specific loan term that is.
You'll be fine with whatever you do I just see that 11K in fees as a waste when you can pay whatever you want on a monthly basis.
Take care and have a good one.