Would you refinance? Analysis please

[James H.]

Okay, here are the current numbers

PI plus PMI = 400/month. Interest is 6.75% PMI is about $27/month. I believe its an effective apr of about 7.5%.

30 year PITI = 575

Mortgage balance = 56,000
assume appraisal should be between 65K to 70K
True ARV probably closer to 65K

Refinance numbers :

PI + PMI = 300, 325 or 350, depending on credit.

Refinance fees = about 4000.

PITI = 475, 500 or 525.

Would the monthly savings be worth the 4000 in fees and the addtions of three years back on to the mortgage?

This is my current residence. So, if I DO decide to refi, I would also be making the decision to hold and rent it when I move in a couple years. I don't think the refi would be worth it if I sold in two years. But I can't really wait two years to make this decision and expect interest rates to be a low as they are now. Of course, that's what everyone was saying two years ago, too...

As a rental it should have gross rents of 750, maybe 800. The house directly across the street rents for 700 but is in really bad shape compared to mine. Rent rates in the neighborhood are about 750 for simalar houses, mine being in better condition than all of them (at least while I live in it!....and unfortunately). I hear that you can get slightly higher rent for Section 8, thus my thinking it might be worth 800 gross rents.

Based on 50 percent rule analysis, it would generate cash flow of 100/month at best and 25/month at worse. So, that is Okay to not so great. But i would get to earn a little doing the property management and maintenance plust there would be mortgage paydown and I expect very moderate apprectiation.

So now I'm ready to hear what my fellow BPers have to say!