All Forum Posts by: Andre Perez

Mark, thanks a lot for your responses. I am a little confused on how the math works out in my favor when putting less money down and getting PMI. I am betting A) that the housing market doesn't turn into 2008 again, leaving me stuck with PMI and that B) my rentals can support the mortgage on the higher payment since I put less money down on the mortgage. I guess I do have more cash on hand during the times i look for renters, and need to supplement the mortgage, but I pay more interest overall on the loan against my home, and going into retirement with a large house payment seems risky. Is the reason you suggest to put as little down towards the home is so that I can have more cash on hand to invest? I only plan on having the 2 rentals, so refinancing them to a 30 year I feel does a few things for me, 1) lowers the mortgage, by extending out the payments, therefore freeing up positive cashflow now (vs taking the loan to term and having the rent be pure income in 15 years) 2) Turns equity to cash in the form of a cash out refi 3) gives me the option to make extra payments to still pay off the loan in 15 years.

I am mainly trying to understand the motivation behind putting as little money down as possible, keeping the mortgage payment high and the PMI in tact and if my ideas behind refinancing my current home and rental to 30 years are good ways to utilize them since they will both be rentals.

I am about to purchase a 700k home.  I plan to retire in 15 years, and selling these properties would allow me to pay off the rest of the home.  Like I mentioned, I'm not completely sold on that, but my main question is regarding the cash out refinance on my current home to give me more liquidity.  I have 140k for a down payment on a new home, but that would be all my cash, and being cash poor makes me nervous.  I do have plenty of credit if things go super bad, but i've always had a 10-20k emergency fund.

I currently have one rental with 116k loan at 4.5% , and 157k value. (Condo, got crushed in the down turn, but I kept it).  I currently barely break even on the rental. I plan to sell it in 15 years.  I have the home I live in with 80k left on a 113k loan at 3%, with a home value of 200k.  I plan on renting it out for 1400-1500.  I have a 15 year loan on it currently, but was considering doing a 30 year cash out refi (120-140k)  to help buffer my liquidity to buy a new home ( I would drain all my cash on the down payment otherwise), and bring in more cash to either invest or pay back into the mortgage. I also plan on selling it in 15 years. 

I've always thought that having a loan for a long time is bad because of interest over time, but if someone else is paying for the mortgage, while being cash flow positive, on relatively small loans, do I really care?  Wouldn't doing a refi into a 30 year loan make me more cash flow positive? and If I change my mind about selling, I can always make additional payments on the loans.  Is there a better plan? Or are my thoughts terrible, but I just can't see it yet? Thanks for any help!