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I am in the process of refi-ing my primary residence. I've got the following options for refinance:
All are conventional loans:
30 or 25 yr @ 3.875 - closing cost: 2600
20 @ 3.625 - closing cost: 2250
15 @ 3.0 - closing cost: 2300
The 15 year payment is about $30 more than what I am paying in my current 30 year, which is not a problem for me to pay. If I take the 25 or 30 my plan is to pay it like a 15 year loan regardless.
Although this is my primary residence currently my long term plan is to hold the property when I am ready or need to move and use it as a rental property. I've run the amortization charts on all these so I have reviewed how the #s work out but I'm not sure what the right strategy is here given my plan.
My instinct is to take the lowest rate but at the same time it feels like I should consider one of the longer terms to allow flexibility in the payment, in the case that I elect to mortgage another property to live in.
I'm also struggling with the 'what ifs' e.g. "what if it turns out a I don't like being a landlord?"
The 3.0 looks so juicy but I wanted to get some feedback from some knowledgeable folks to make sure I'm thinking about the right decision criteria. I also want to ensure I'm not making decisions based on emotion.
I've already locked these rates so I need to make a decision on this within the next couple days. I really appreciate any thoughts you can share.
There is no right decision unless you have a crystal ball. Since you plan to pay your mortgage as if it's a 15 years anyway, choosing a 30 years gives you some flexibility but will cost you about $12K every 5 years.
It's a personal choice question if you qualify for either 15 or 30 years.
Those are incredible rates. I refi'd to a 12 year loan about a year ago, and have an 820 credit score, but the best I could find was 3.74%. But that was with no closing costs. The best I could find with me paying closing costs was about the same rate on a 15 year loan, though.
If I could have gotten a 15 year at 3% with only $2300 in closing costs, I would have asked "where do I sign"?
Personally, I'd get the shortest loan, with the lowest interest rate, that I could comfortably afford. If the 15 year means you can't put money in your retirement funds or save for emergencies, then I'd go longer. But if you have a decent cushion and the 15 year isn't a stretch, I'd take it and save on the interest.
But you mentioned buying another house and making this one a rental. So you'll want to make sure that the refi loan doesn't require you to occupy. You also may be better off making the lower payments on a 30 year loan, and saving the difference for the down payment on another house, since interest rates could go up (they almost couldn't go down from here), you would be better off putting as much down as possible, rather than borrowing at a higher rate.
I am in the process of refi-ing my primary residence. I've got the following options for refinance:
All are conventional loans:
30 or 25 yr @ 3.875 - closing cost: 2600
20 @ 3.625 - closing cost: 2250
15 @ 3.0 - closing cost: 2300
The 15 year payment is about $30 more than what I am paying in my current 30 year, which is not a problem for me to pay. If I take the 25 or 30 my plan is to pay it like a 15 year loan regardless.
Although this is my primary residence currently my long term plan is to hold the property when I am ready or need to move and use it as a rental property. I've run the amortization charts on all these so I have reviewed how the #s work out but I'm not sure what the right strategy is here given my plan.
My instinct is to take the lowest rate but at the same time it feels like I should consider one of the longer terms to allow flexibility in the payment, in the case that I elect to mortgage another property to live in.
I'm also struggling with the 'what ifs' e.g. "what if it turns out a I don't like being a landlord?"
The 3.0 looks so juicy but I wanted to get some feedback from some knowledgeable folks to make sure I'm thinking about the right decision criteria. I also want to ensure I'm not making decisions based on emotion.
I've already locked these rates so I need to make a decision on this within the next couple days. I really appreciate any thoughts you can share.
Cheers.
If you still would have a 6 month emergency fund, I'd say pick the 15 year, otherwise do the 20 or 30 year.
None of those rates exist without significant buydown.
That's an interesting comment. I just got 3.5% with a lender credit leaving closing costs at about 1400, could have done 3.25 if I wanted to pay .4 points. This funded on 10-26 and I know rates change but I find it hard to believe it would be that drastic of a difference.
I am in the process of refi-ing my primary residence. I've got the following options for refinance:
All are conventional loans:
30 or 25 yr @ 3.875 - closing cost: 2600
20 @ 3.625 - closing cost: 2250
15 @ 3.0 - closing cost: 2300
The 15 year payment is about $30 more than what I am paying in my current 30 year, which is not a problem for me to pay. If I take the 25 or 30 my plan is to pay it like a 15 year loan regardless.
Although this is my primary residence currently my long term plan is to hold the property when I am ready or need to move and use it as a rental property. I've run the amortization charts on all these so I have reviewed how the #s work out but I'm not sure what the right strategy is here given my plan.
My instinct is to take the lowest rate but at the same time it feels like I should consider one of the longer terms to allow flexibility in the payment, in the case that I elect to mortgage another property to live in.
I'm also struggling with the 'what ifs' e.g. "what if it turns out a I don't like being a landlord?"
The 3.0 looks so juicy but I wanted to get some feedback from some knowledgeable folks to make sure I'm thinking about the right decision criteria. I also want to ensure I'm not making decisions based on emotion.
I've already locked these rates so I need to make a decision on this within the next couple days. I really appreciate any thoughts you can share.
Cheers.
If you have run out the numbers you should have a clear answer. Numbers are simple to look at, what is your total interest payment on the 3 options, how long do you plan on living there, if you are going to rent it eventually what is the current rental rate on the unit, and what is your current interest to the end of the current loan. Once you figure all that add closing costs to the interest and pick the cheapest option that fits your goals, you never want to go negative cash on a rental so keep that in mind.
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