I originally purchased my four plex as an owner occupied building taking advantage of 3.5% down payment.
Since I no longer live in the property and have all the units rented out I have a high roi but I am not happy with my cash flow. I am considering recasting my mortgage to increase my cash flow. Thoughts and opinions?
@William Hauptly given that you do not live in the property you will take an interest rate hit for being NOO. How long is the current term in the loan and what's your equity position?
@Joshua Baker I spoke to my lender about this option. My interest rate will remain the same and there is no fees for recasting. I have 24 years left in my term 12,000 equity.
@William Hauptly if they can guarantee you’ll see no increase in rate and you’re paying no fees I’d take a look at what the recast will offer cashflow wise vs lump sum that will be required to do it and see if those numbers make sense. If it puts you into a more conservative position that also garners more cashflow I don’t see a downside other than losing that lump sum capital for other investments.
@William Hauptly by definition, recasting a mortgage will never change the interest rate or cost you any money. It's completely different from refinancing, banks usually don't advertise they allow it because it basically allows you to save on interest. If you want more cash flow, but don't want to acquire additional property, I think it's a wise move especially if you have a strategy of eliminating debt. If your goal is to grow as much as possible, then the capital would be better served putting towards a new investment.
I recasted my primary mortgage to maximize my HELOC for future investments, and that has worked out nicely. Everyone has different opinions but recasting is a valuable tool.
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