To Refi or Not to Refi

[Giovanni DiBlasio]

As the title suggests, I'm considering refinancing a duplex of mine. I bought the house back in 2021 using an FHA loan and lived in it until this past November.

The rate is 2.75% and the monthly PITI is about $3,000. I took a HELOC out on the house about 2 years ago now, that payment is about $800 a month.

25 years left on the mortgage and 5 left on the HELOC.

Total monthly rent is $4,950, so it cash flows a decent amount even with the HELOC.

I'm considering refinancing into a DSCR loan at around 6.25% for a total loan amount of $420,000. The refi would net me somewhere between $20,000-$30,000 cash back and the new monthly payment would be about $3,800.

# Pros

\- Would be able to move the property into an LLC (currently under my name which is not ideal)

\- The obvious $20,000 to $30,000 in tax free cash

\- Consolidate my payments into one instead of two

# Cons

\- Would be tacking on another 5 years to the mortgage

\- There is a 5/4/3/2/1 prepayment penalty on the new mortgage

One other thing to consider is since i lived in it for more than 2 years, I could sell anytime within the next 3 years and half of the gain should be tax free. Currently it’s worth about $600,000 and I owe a combined $380,000.

[Travis Timmons]

You're probably going to pay $8k in fees/closing costs to pull out $20-30k of equity while giving up once in a lifetime debt. There is some real sticker shock on DSCR closing statements - you get nickeled and dimed to death. That does not factor in the potential hit if you sell or refi within 5 years. It's a no brainer to me - keep it as is.