Should I refinance or not (or should I wait)?

solarmass · Joined: 25 Jun 2009 Posts: 1 2.10 Dollars($)

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 (to avoid PMI). 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. And I do not plan on moving any time soon, if at all.

Please let me know your thoughts. Thanks.

Gary

matthewjbowles · Joined: 01 Jan 2009 Posts: 16 8.69 Dollars($)

I am not sure on your original balance on the 550K mortgage but based on current amount The P and I should be $3210 (not correct due to lack of original balance). Roughly a $580 savings, which if applied to the new mortgage the loan would be paid in just over 20 yrs. Again without all of the details it is tough to say. If you could give current prinicple and interest on both loans and original loan amounts, we could figure it out. If the investment property cashflows with the new loan being at 15 yrs that may be an option also. Then the savings on the personal residence could be used to payoff investment, residence, or just save.

Thanks

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