Will refinance make sense?

Guest 0.10 Dollars($)

Hi, I am thinking of renting a property for just a year and then selling it the next year. so do i refinance now to interest-only loan for getting max cash? will it be a sensible decision?

Guest 0.10 Dollars($)

I don't think it will be wise to do so because there are loan costs involved in the refinance. And, you cannot recoup the costs just by refinancing for a year.

miller_st · Joined: 17 Jan 2007 Posts: 917 168.82 Dollars($)

That could be risky. You need to think what would be your options if you are not able to sell after one year. You can get stuck with an I-O mortgage. Right now property market is going through turmoil and you can't be sure what will it be like next year.

Miller

evolovik26 · Posted: Mon Aug 20, 2007 12:30 pm Post subject:

There is not enough information. Is the new loan going to save you money? What is the cash for? How much cash can you get? Can you get a no closing cost loan? How much is a max cashout? Are you going to borrow 100% of your property worth? Why you need the cashout now?

Niicss · Joined: 03 Oct 2005 Posts: 1047 156.17 Dollars($)

I also feel that you should explain more about what your plans are. Tell us how long the present mortgage has been for. And why do you want to sell off the property within after a year?

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Hi Ben,

Nowadays, refinancing with an interest only loan has become a popular thought as the borrower can get maximum cash and can save money as they do not have to pay both the principal and the interest. But the borrower forgets that he has to pay the principal amount in a lump sum at the end of the loan term.

An interest-only loan works well for borrower who expects to be in their home for a period of at least ten years. In that case, the loan payments will be mostly towards the interest for the first few years of the loan.

But if you are thinking of selling the house by next year, then you may not be able to benefit from the interest only loan as you will be living on it for a year. So, it is better if you don't consider an interest only loan.

For further guidance, you can seek the help of any financial advisor

helping_user

Hi Ben,

The current national average for closing costs on a refinance loan is above $3000. That's quite a large sum. So, if you're just refinancing for a year, I shall suggest that you look for some other option to get cash. The best thing will be to calculate and find out if refinance can help you to save. You can use the Mortgage Refinance Calculator for this purpose. Though the calculator isn't meant for an interest-only loan, yet you can use it because in the initial years of repaying a loan, most of the monthly payment goes towards paying the interest. So, it will give you a rough idea as to whether it is worth refinancing.

Thanks.

heavenhack7 · Joined: 05 Apr 2007 Posts: 73 0.78 Dollars($)

hi so you mean to say that you are giving on rent for 1 year and than sell it ................................see i agree with other members explain in detail wat exactly you want us to focus on and what conditions are you in and which country are you in all these things are neccesary for us to kno so that we can assist you better.

i hope you can understand wat i want to convey so plz explain a litlle bit more so that we can assist you better

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