Updated almost 10 years ago on . Most recent reply
Dispute about cash flow versus mortgage terms
Hi,
We (husband and wife team) would like to get some perspective on when to to know how to assess long-term equity gain with immediate cash flow. We are going to rent our current home which has $90,000 left on the note at 3.25 percent and in ten years will be paid off. In order to buy the house we want (a foreclosure) and another REI I want to take out a home equity loan of $60,000 since our property is valued at $190,000. We would break even on rent at $1,700 a month and pay a little with expenditures but the property's mortgage loan would be completely paid off in ten years with just the remaining equity loan at $300. We would then be cash flowing $800 not accounting for the rent inflation. The hubs wants to do a cash out refi at 3.6% which would start the mortgage completely over but yield us $300 a month in cash flow when we rent. Is cash flow always King?