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My broker was able to lock me in at a 5.0% fixed 30 year rate before the rates rose last month. I have 2 properties:

owner occupied: $550,000 balance, 4 years paid into a 30 year mortgage at 5.75% 30 year fixed
investment property: $50,000 balance, 17 years paid into a FHA 1.0% 30 year adjustable arm, currently at 4.875% (will adjust in April 2010)

I don't have enough equity in my main house anymore, so I need to do a cash out refinance for the investment property to make this happen. So I would be refinancing the main house at 5.0% fixed for 30 years for a $490,000 loan amount (to make it conforming), and the investment property at 5.375% fixed for 30 years for a $110,000 loan amount.

There will be about $17,000 total in closing costs for both loans, due to 1% origination fees on both loans and high closing costs in my state.

I just don't know if its worth it. I was working with the broker and hoping for a 4.75% loan on the main house, but it never dropped that low. But who knows if the rates will ever go that low again, much less 5.0%.

It just seems like I'm not gaining that much on the monthly payments. How long will it take to recoup those closing costs?

Also, I'm not happy about spreading out a loan to 30 years again after I have already paid into for 4 years. Ideally I'd like to go to 15 years, but that isn't an option because I could not afford it. So, when you figure out the break even point, how does that 4 years of payment factor into it?

And, I've been paying on the investment property for almost 18 years. I really don't want to stretch that balance back to 30 years, and was thinking of trying to pay that off in 15 years if I refi'd.

Both of these properties are in a solid area, near Washington D.C. so my long term potential is good.

Please let me know any thoughts. Thanks.

Gary

I do not have a mortgage pro. That is basically why I am posting here. If the question is whether the rental is worth holding, the rental is worth at least twice what I paid and that is with the most recent drop in housing prices. My owner occupied property is worth less because it was bought in the last few years. But I expect to hold on to both for the forseeable future.

Both properties are in the Baltimore/Washington D.C. area.

What disadvantages are there to refiancing an existing 30 year loan where there are only 13 years left? It seems taking cash out and starting all over again at 15 or 30 years is a waste. I pay a lot of principal on this loan now. What are the ramifications of doing this?

Thanks.

Can you explain what you mean by "cash out". Also, what do you mean by FHA streamline?

I have 2 properties to deal with here.

Property #1 - first house bought with FHA loan, ARM that adjusts every year (1% max), is currently at 5.875%, due to drop to 4.875 in a few months. 30 year mortgage that has 13 years left. I've been riding this ARM for 17 years and its been good, but with rates this low it seems like a good time to refinance to fixed. 50k+ balance left, and property is worth over 200k. This is a rental property.

Property #2 - main house, 30 year fixed, 26+ years left on loan. Jumbo loan at 5.75%. Put 20% down and property values have declined slightly in area so may not quite have 80/20 LV right now. Balance is $530k+.

Seems like a no-brainer to re-fi the rental at 15 years, maybe 10? I'm wondering if I can take out a home equity loan on the rental, once refinanced, and use that to refinance the other mortgage to get the amount down under the jumbo amount.

Thoughts? Comments?

Thanks.

Gary

And I assume I'd also add back in to the net income my tax savings, i.e. depreciation. In fact, the tax form seems like a good place to go to get all that info required to find out "net income".

Trying to understand this... when figuring out the ROI, you said take the yearly net income. How is this net income calculated? Let's say I collect $900/month rent. Total rent for a year is $10800. To get the net income, what do I subtract... any cost associated with the rental property, but not including the mortgage?

Thanks.

I'm way past 80% LTV ratio. I've been told and since researched it: FHA loans CANNOT have PMI removed, ever. This is an FHA loan because it was our first home. I don't think it had much to do with the building.

Question: can you explain why the 15 year loan at 5.75 is so much better than the 10 year loan at 5.25?

Question2: how do the $3000 in closing costs figure into what you said?

Thanks.

I have rental property that I have owned for 14 years. It was our first house. We got an FHA ARM 30 year, which is based on the 1 year t-bill (rate + 2). Its been a great ARM easily beating out the fixed rate in most of those years. The market was poor back when we moved, so we (luckily) held on to and rented it. Finding renters in my area is not a problem. Loan balance is 67k.

Option #1 Do nothing and ride out the ARM. The ARM is currently at 4.875, due to adjust in May. It can only go up (or down) 1% a year, but it looks like it will go up (t-bill currently approaching 4.00). In 2007, who knows, could go as high as 6.875. Its capped at 11.5%. This loan also has PMI of about $28/month. Because its an FHA loan, the PMI cannot be removed.

Option #2 Refinance at 10 or 15 years fixed. Because its a rental property, the best I have found for 10 years is 5.25, 5.75 for 15. Both are with one point. Its about $3000 for closing based on the estimates I've received.

Option #3 Pay off the loan. I have enough cash available after recently moving and selling house #2.

Let me know your thoughts.