Should I refinance my rental property!!!

[Sammy Patel]

I currently have a rental property that we have owned for 10 years. I refinanced 2 years ago with the HARP program to a 15 year fixed at 3.5%. My wife's father suggested this was a good move for us. I have been renting it out for the last 3 years. Unfortunately, the refinancing move now puts us $633 out of pocket per month to cover the total cost of the rental (mortgage + HOA fees). This does not include any maintenance or repairs or cover costs when it has been empty. Should I refinance back to a 30 year fixed which would allow us to break even on mortgage and HOA, but still be out of pocket on repairs and maintenance.

Really need guidance on this. I have had to reduce our 401(k) and contributions to the 529 plan for the kids to make up this difference. My wife and father in law are ok with increasing out debt on credit cards to just so we can pay off the condo in 15 years. I am the opposite. I do not like carrying any balance on credit cards.

All help is greatly appreciated.

[Mike H.]

I agree with @Joe Villeneuve.

I'm taking a little liberty with the saying. But my rule
of thumb when it comes to investing is always:
Cash flow is king.

People on here always talk about risk and over leveraged based on the LTV.

To me, LTV means very little if the house is cash flowing big time.
In this case, Joe hit the nail on the head. Get the 30 year loan to lower your payments.
If you want to pay it off in 15 years, you can still do that. But the key is you don't HAVE to do that.

With a 15 year, you do.

It makes no sense to eat $500 a month to get it paid off in 15 years. Why? If you're at 3% interest, do you really want to pay that money off? Thats the cheapest money you're ever going to get.

Bump it to 30 and pay the thing off in 30 years. At some point along the way, if you find you do have a ton of extra cash, use it to buy another rental property that will make you money (say 500 a month) and then this property will essentially be paid off because you won't be making the payments out of your pocket - they'll come from the rental profits of the next house.....