Refinancing an Investment Property
I currently own 2 investment properties, which are working out pretty well and have enough capital to pull the trigger on a 3rd one, 20-25% down with the rest being financed. My first 2 properties are financed 30 Year mortgages with fixed interest rates. Current interest rates are at a point where refinancing to a 15 year mortgage might make sense, financially speaking. Here is the dilemma that I am facing and hoping to get some good insight from all of the real estate investor gurus out there:
Option 1 -
Refinancing to a 15 year mortgage with a lower interest rate. Monthly payment will increase, which will probably eat away from my monthly cash income, but will definitely save interest in the long run, plus I would be owning these properties outright in 15 years instead of 30. (I am currently 34 years old, so some great sense of security to have them paid off by the time that I am 50)
Option 2 -
Stay with the current 30 year old mortgage, continue collecting and saving, and potentially increase the number of properties. This will be slower but steadily continue to contribute towards growing my portfolio. The equity+interest on my current properties is being paid by the tenants, so I am not affected by that much, unless there is a shift on demand for rentals in the area.
Please feel free to share your thoughts with me. My experience so far has been that there is not one way of doing this right as there are multiple other factors that can influence one's decision.