OfflineI am looking to purchase my first investment property and my question is: Since I have equity in my current home, is it better to refinance my primary mortgage to pay cash or get a second mortgage for the property I want to buy. I am already pre-approved for a second mortgage so that's not a problem. What would be better in the long run. I would greatly appreciate any info you can give me. Thanks in advance!
Alena
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AlenaM You might be better off getting a equity loan or line of credit the interest might be better than a 2nd mortgage.
http://kendrickpropertymanagement.com/
http://rochesterapartmentrentals.com/?page_id=10
Jim,
thanks for your reply.. I do have a HELOC with an APR of 3.75% right now but I know this can fluctuate cause I've seen it as high as 8.75%
is there a disadvantage of doing a re-fi?
The secret of getting ahead is getting started. The secret of getting started is breaking your complex overwhelming tasks into small manageable tasks, and then starting on the first one.
-- Mark Twain
Alena I let Bill give you some Information on that he is far better qualified to do that,I'm sure he will see this shortly and respond as he is always glad to help us all.
http://kendrickpropertymanagement.com/
http://rochesterapartmentrentals.com/?page_id=10
Alena, welcome to the website; you will find a wealth of information here.
But to your question. There is a mathematical answer to your question and it isn't hard to figure out; it just has a lot of moving parts that interact with each other. I am going to see if I can find a link to a website that will allow you to do it for yourself in the privacy of your home. In the mean time, some of the items that you need to know are: your current rate, the fees associated with a new loan, the new loan's rate, how long you are planning to live there and your tax rate.
I will get that link to you as soon as I can because I ran across a good one and will be happy to share it. I found it, so see below.
Here is one of them so you can compare these costs to your existing situation.
http://www.bankrate.com/calculators/mortgages/refinance-calculator.aspx
Always Looking to Acquire Houses | Always Looking to Amaze Investors
But to your question. There is a mathematical answer to your question and it isn't hard to figure out; it just has a lot of moving parts that interact with each other. I am going to see if I can find a link to a website that will allow you to do it for yourself in the privacy of your home. In the mean time, some of the items that you need to know are: your current rate, the fees associated with a new loan, the new loan's rate, how long you are planning to live there and your tax rate.
I will get that link to you as soon as I can because I ran across a good one and will be happy to share it. I found it, so see below.
Here is one of them so you can compare these costs to your existing situation.
http://www.bankrate.com/calculators/mortgages/refinance-calculator.aspx
get the HELOC
Bill,
Thanks for the site...It looks like I'll be saving some money with the re-fi. Also I think it makes sense since re-fi rate is about 4.75% fixed and 2nd mortgage rate is 5.4% for an investment property. This will also allow me to pay cash for the property rather than having to finance it.
Elixbrown,
The HELOC is just too risky for me because the interest rate can fluctuate, but thanks for your input.
The secret of getting ahead is getting started. The secret of getting started is breaking your complex overwhelming tasks into small manageable tasks, and then starting on the first one.
-- Mark Twain
see how easy that was. you have some of the best on this website and 3 of them replied to your situation. best wishes on your deal. great job, Guys!!
Linda, Army EOD Mom
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if the interest rate on your current loan is low enough, then I would not refinance-I would go with the HELOC. Refis are more costly.
Happy Investing!
Valerie
Valerie
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I know.. this is the best site ever...
The secret of getting ahead is getting started. The secret of getting started is breaking your complex overwhelming tasks into small manageable tasks, and then starting on the first one.
-- Mark Twain
current mortgage - 5.66% fixed 13 years left to pay.
HELOC - 3.75% but can go up to 8.75%-depending on market
RE-FI - 4.75% fixed 30yr.
what do you think?
The secret of getting ahead is getting started. The secret of getting started is breaking your complex overwhelming tasks into small manageable tasks, and then starting on the first one.
-- Mark Twain
I agree with your choice assuming 1)there aren't onerous fees with the refi and 2)the interest rates will rise in the near future.
Go lock that 4.75% in today!!
Always Looking to Acquire Houses | Always Looking to Amaze Investors
Thanks for the site...It looks like I'll be saving some money with the re-fi. Also I think it makes sense since re-fi rate is about 4.75% fixed and 2nd mortgage rate is 5.4% for an investment property. This will also allow me to pay cash for the property rather than having to finance it.
Elixbrown,
The HELOC is just too risky for me because the interest rate can fluctuate, but thanks for your input.
is an ARM??? Thats the problem. Get it redone into a fixed rate and you'll come out cheaper