leilani m asked:
I have a mortgage loan at 6% with a balance less than 80,000/8 years. Should I refinance the balance that I owe to invest my money somewhere else? Would it be worth refinancing with only 8 years left? I was thinking about purchasing a new home and renting the current one that I have. The market where my home is very good for renting. Thank you.
MITCH
I have a mortgage loan at 6% with a balance less than 80,000/8 years. Should I refinance the balance that I owe to invest my money somewhere else? Would it be worth refinancing with only 8 years left? I was thinking about purchasing a new home and renting the current one that I have. The market where my home is very good for renting. Thank you.
MITCH
HERMAN
Dear Leilani,
Without greater knowledge of your full loan terms and the likelihood of your finding a “good” investment, I would recommend staying in your present position. Why?
(1) Your current payments reflect a far greater percentage of principle than interest.(2) Your financing costs will likely exceed any savings from a nominal discount on your interest rate for your remaining $80,000. (3) The real estate market is still at a critical stage for at least the next six months and markets that have not previously sufferred may suddenly tank on general economic grounds. (4) This is not the best time to take risks. (5) Enjoy your good fortune of being able to sleep well at night. (6) Unless the home you wish to purchase is in a distinct real estate market many miles from your rental property, you will be putting all your eggs in a single basket. Is this what you want to risk?
Residential real estate is no longer a favorable investment strategy. Few people are rushing to buy or capable of getting loans. Your investment will bring a few extra dollars of income, slow appreciation and new best friends in the form of tenants who will call you 24-7 every time the toilet backs-up, some water leaks or light bulb flickers. You may not get a kick out of managing your property and take it personally when you see it being hard used or abused. Hard to get out of your situation once you take the plunge.
Alternative- Buy common date U.S. gold coins or bullion. Stash in a safety deposit box. When Congress gets through spending 835 Billion Dollars we will see gold at @$2,500 oz. On the other hand, McDonalds will have new famous $10 value meals.
Good luck.
Comment by blcohen529 — August 9, 2009 @ 7:21 am
MARLIN
With 8 years left on your own, gosh…I personally would not refinance. The refinancing fees are so high…it would not be worth it to me. Also, what you are suggesting sounds rather risky to me. Rentals can be an ugly business and a lot of hassle. Maybe you could find a house in your area that is seller financed, so you don’t have to worry about a 2nd mortgage. Or even a ‘rent to own’ for a few years to see how it goes. Regardless, I think I would try to finance the second home before I would go this route.
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