Should I Refi?

Question

I bought my property last year September. I wanted to refi but I am unsure of the 1. the process 2. is it the best call? due to it only being a year and not much equity in it. I understand alot variables contribute to this question so if you're free please pm. We can hop on a call

River Sava · Answer

Hey April -

Refinancing after a year if there's limited equity depends on your goals—lowering your monthly payment, cashing out, or switching loan types.

The process usually involves checking your current loan terms, appraised value, and credit situation. It's worth considering if rates have dropped significantly or if you're looking to pull equity for another investment.

Happy to chat more about your situation!

Doug Smith · Answer

I think you have to ask yourself what you're trying to achieve by refinancing at this point. Why are you wanting to do it? Is it to lower rate? Bleed out equity? Understanding that would be a huge help. You would also want to ask what is your current rate, what rate can you get, what are the closing costs that are involved including points, ect. If you oversimplify it and take your total cost to close the deal / monthly savings = # of months to Break Even. If that time is relatively short, then a refi might make sense. If, however, it's a longer term, perhaps staying put might make the most sense. There are many variables that were not in your post that we would need to know to point you in the right direction. I really hope that helps you.

River Sava · Answer

Sent you a dm, April!

Devin Peterson · Answer

Doug is a legend and makes a great point. What is your WHY. Whats the purpose you are refinancing? That will answer the question right there.

April Smalls · Answer

Thank you guys!. Appreciate it!

Frank Pyle · Answer

Here are my thoughts about your decision to refinance.

• Process:

Understand your current loan terms.
Check your credit score.
Compare offers from different lenders.
Get your property appraised.
Submit your application and go through closing.
• Understand your current loan terms.
• Check your credit score.
• Compare offers from different lenders.
• Get your property appraised.
• Submit your application and go through closing.
• 
• Considerations:

Current interest rates vs. your existing rate.
Amount of equity built in one year.
Closing costs and fees.
Your long-term financial goals.
• Current interest rates vs. your existing rate.
• Amount of equity built in one year.
• Closing costs and fees.
• Your long-term financial goals.

• Understand your current loan terms.
• Check your credit score.
• Compare offers from different lenders.
• Get your property appraised.
• Submit your application and go through closing.

• Current interest rates vs. your existing rate.
• Amount of equity built in one year.
• Closing costs and fees.
• Your long-term financial goals.

It's a complex decision, so consulting a financial advisor or mortgage specialist might be helpful. Let me know if you have more questions!

Erik Estrada · Answer

I think in this case, It's best to save money for the flip than to pay closing costs, and not really cash out anything. I would recommend running scenarios with a lender, and if your bottom line is not enough to help you get started flipping, then it's best to hold off.

April Smalls · Answer

I want to Refi Cash out to find my first fix and flip deal. But I do not have much equity within the home.

Jake Baker · Answer

@April Smalls

Several things to consider here. Are you aiming to lower your monthly payment, shorten the loan term, or switch from an adjustable rate to a fixed rate?

Interest Rates – Are current rates significantly lower than what you’re paying now?

Closing Costs – Remember to factor in refi fees and how long you plan to hold the property to determine if refinancing will save you money overall.

Since you mentioned owning the property for only a year, your equity might still be limited, impacting your options or leading to higher costs.

Erik Estrada · Answer

Hi April,

As others mentioned, you have to have a reason why. If you have a 9% rate and you need to get down to the low  7s and cash out, then maybe it could make sense. But if you are unsure, it's best to just hold off until there is a need to refi.

Should I Refi?

Should I Refi?

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