All Forum Posts by: Evelyn Roper

Personally, I prefer to take a 30 year mortgage and apply extra payments each month toward principle.  This way, if I have a lower income producing month, the mortgage amount required is smaller than it would be on a 15 year term.  I pay extra (double my principle payment) most months to shorten the loan term.  A 30 year term also has the benefit of showing a lower debt/income ratio.  

I don't know what type of loan you have on your primary or how much equity you have in it, but I think it is an excellent time to refinance if your equity is substantial.  We bought our house in 2010, made extra principle payments each month and by 2016, we had a good bit of equity.  When we refinanced, our credit was better than it was in 2010 and interest rates were lower.  We went from paying an interst rate of 5.75 to 3.625.  We were able to pull out 20,000 in a cash out refi and our payments increased a whopping $50 a month!  We did "restart" a 30 year loan though.  This new payment is still less than the amount we devoted to paying before (with extra principle payments) We used that cash out refi to purchase our first rental.  It might be worth looking into.  I would suggest having cash reserves set aside for closing, insurance and incidentals though!  It was a good option for us.  It may be for you too!

32-40k or??  Your numbers seemed a bit confusing.  Congrats on finishing your first flip!

The insurance seems low. Can you really cover all 6 units for $900 a year? I may be in the wrong state! I pay more than that for my primary SFH but my rates may be higher due to tornadoes in Oklahoma. I would recommend calling your insurance agent to get a detailed quote.

You will need certified funds for closing at the title company.  This would be either a cashier's check or money order.  You can't purchase either of those with a credit card.  The only way I could think of is a cash advance on the credit card but most interest free cards do NOT allow free interest on cash advances, only on purchases.  Some cash advance rates are upward of 25% so be careful and make sure you read the fine print!  I am hoping that someone else will have info on how to do this because, to me, it just doesn't seem workable.  Good luck! 

If she checks out well in every other area, I would definitely consider it.  People customarily pay yearly rents in Indonesia and parts of Europe as well.  I know students who pay rent up front when their student loans or grants come in.  I would make sure to outline who is considered a tenant and explain that no one else is allowed to move in without approval.  Make sure it is in the lease.  Check local laws regarding when that money is actually available for your use.  I wouldn't think you could spend it all at once but may take it out of an account monthly.

I have also heard that banks require documentation of where the down payment comes from.  It can not be borrowed funds.

Disqualifiers

Do they have leases in place?  When will their leases expire?  Which unit do you prefer to occupy?. Answers to those questions might help someone to point you in the right direction.  

We did this with one of our properties.  I was surprised when we were given a much lower interest rate than we had been paying.  We refinanced from a 30 year (5 years already paid) for a new 30 year note. The monthly payment only went up about $50 a month (but was still less than we had been paying with our "extra" principle payments).  It made sense for us.  We pulled out enough to be able to purchase another property outright.  The new property needs work but it is something we can manage.   I think refinancing can be a good thing IF you refinance and use the money for another asset.  Where people have problems is when they pull out cash to fund vacations or pay of credit card debt.