15 year term then refinance to 30 year?

Question

I am currently looking for my first investment property which will be a house hack!

At this point i would like to purchase the home on a 15 year term for the first 8 months or so and as i get roommates consistently pay less of a the mortgage.

Then after that initial period i am going to refinance the home into a 30 year loan reducing the monthly mortgage and effectively getting my money back

Is there anything wrong this my plan?

Dalyn Hazell · Answer

I don't see a good reason for doing that since you'll pay 2 sets of closing costs. Also, interest rates may increase after your "initial period". They are historically low right now. Why not secure a 15 or 30-year right away be done with it?

Tommy Keay · Answer

I have always been drawn to 30 years because it makes more sense. 1.) People are paying your mortgage down anyway 2.) Higher cash flow

Also depends on your goals. Is your goal to maximize cash flow to retire or to build the most equity you can in 15 years?

Andrew Gomez · Answer

Seeing as i did have it wrong on my end i am glad i have forums like these to prevent me from doing something less than profitable. I appreciate this guys!

Filipe Pereira · Answer

Hey Andrew, unless I misunderstood, I think you've got a couple of things backwards here.

The 15 year loan will cost you more per month in principal (and less in interest) and will leave you with a higher monthly payment.

The 30 year loan will cost you less per month in principal, more in interest and will likely result in a lower monthly payment.

Refinances are not free, and typically cost thousands of dollars, so it's not recommended that you do one unless you're going to save a ton of money by reducing your rate, or changing loan terms (i.e. 30 yr to a 15). So yeah, as others said, it's probably best to start with the 30 year mortgage.

Joe Villeneuve · Answer

Why are you doing two mortgages?  Just do the 30 year one from the beginning.

Anthony Wick · Answer

@Andrew Gomez

What? Why in the world would you want to pay the added expense of a refinance within a year?

None of this makes sense to me. Take a 30 year mortgage, let tenants pay the mortgage. Save money for another rental.

Andrew Gomez · Answer

I was thinking of refinancing later with it being a longer term not only would i receive my money back i would also essentially cut my monthly mortgage in half as i refinance? Would this work?

15 year term then refinance to 30 year?

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