Albrightsville, PA · Member since 2018 · 118 posts · 79 votes
I have three sfr that have an 5/1 ARM that started in Sept 2019. I had to refi out of a HML and my credit was not where I needed it to be at the time. I just had a bankruptcy removed from my report and now would like to refi out of the 5/1 ARM. My rate is 7.6% now. Any thoughts. In April I will have completed two flips and will pay down all of my personal debt.
I have three sfr that have an 5/1 ARM that started in Sept 2019. I had to refi out of a HML and my credit was not where I needed it to be at the time. I just had a bankruptcy removed from my report and now would like to refi out of the 5/1 ARM. My rate is 7.6% now. Any thoughts. In April I will have completed two flips and will pay down all of my personal debt.
You have to read the loan papers and see if there is an early payoff penalty (pre-payment penalty). That seems to be pretty rare these days but every loan is a little bit different and there is no way to know without reading the documents.
Rental Property Investor · Miami, FL · Member since 2018 · 110 posts · 113 votes
6y
Hi Shane,
Oh man, that interest rate is a killer! Nonetheless, it's cheap money and hopefully you're cashflow positive!
I would first check my loan terms and verify if you have any type of pre payment penalty (which you most likely will).
I would then do a side by side comparison chart with your expenses if you were to 1. refi out of the ARM and pay penalties+closing costs on new loan for a period of 5 years with your new interest rate VS. 2. keep loan as is and pay your current rate for the next 5 years and the refi at that point with that year's current penalty.