Is it a good idea to refinance?
We want to invest in AirBnB properties and we want to use equity in our primary residence for a mortgage cash out refinance. We have 4.25 years left on a 15 year loan at 2.75% interest with $140k remaining. The refinance rate is 2.85% with $10k in fees and $5k for escrow. We also have an unused line of credit of $120k on the property at 3.5% interest. The property appraised at $530k, is it worth taking on the refinance? by psharpe725 from Cleveland, Alabama. Dec 2nd 2021
Dan Paladin (dpaladin)
#356 ranked lender in California - 792 contributions
The question really relates to financial objective. Just it meet that. What will be the projected ROI? Does the unused line of credit provide the funds needed to execute your purchase? If so, why take out a new 1st loan? If you have a financial planner might be a good idea to discuss this with them to see if the numbers work and meet your overall goal.
Joe Metzler (JoeMetzler)
#17 ranked lender in Minnesota - 4,843 contributions
My standard answer is it makes sense to refinance if the math makes sense to you. $10k for costs (plus escrow) for a $140,000 loan tells me you are paying points to get that rate. Do the math on that, and a lower cost version. You'll probably want to close that unused line of credit to get a better deal on the refinance, and then reopen one again after the fact... Ask your Loan Officer for more details on that... I lend in MN WI IA ND SD. Find me at WI-MortgageBroker.com / Cambria Mortgage NMLS 274132
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