Cash out Refinance in Pennsylvania HELP!!! :)

[Sara Finley]

Hello - I currently own two, three bedroom row-home rental properties (closing on a 3rd in May) which were purchased with a private loan from my father-in-law.

I would like to do a cash-out-refinance on the first two properties both with remaining balances of $40,000 .  Our current interest rate with my father in law is 3.75 - which is fine, but I would like to use the equity in the properties to purchase more properties, without having to borrow from him again. Original loans were for 10 years - I would also like to extend the length of the loan to lower payments.  I am new to this - so I do not want to get in over my head or make a big mistake.

I appreciate any and all advice and thanks for reading this ridiculously long post. :)

Long story short - I received a quote from our bank (PSECU) of the following for 15 years:

My current payments are around $600 with a few years into a 10 year loan.

3.125%	4.341%	5.750%	$6,553.73	$417.97	View
3.250%	4.311%	4.750%	$5,953.73	$421.60	View
3.375%	4.282%	3.750%	$5,353.73	$425.26	View
3.500%	4.254%	2.750%	$4,753.73	$428.93

The final calculations are an estimate based on the 3.5% interest rate above:

• Mortgages to be Paid in Full $40,000.00
• PSECU's origination charge $2,450.00
• Required services we select $421.88
• Required services you select $1,407.85
• Government recording charges $474.00
• Fees paid in advance $172.60
• Your new loan amount ($60,000.00)

Estimated Cash to Be Received at Closing $15,073.67 (times 2 for the other property)

My question is - should i just hold on to the original loan - I have 7 years left on one property and 8 on the other, or is this a good deal to get cash for another property?  I have no idea what normal rates are - but I really like PSCU as a bank in general. I just don't want to make a mistake and pay too much. 

I have a hard time finding any other quotes w/out having to give my credit information and getting dings on my credit - OR - getting hounded with phone calls 24/7. My husband is also leery b/c I have been doing all the reading and researching so I have to be able justify it to him as my business partner as well. 

Thanks for reading and I really appreciate it!

Sara and Drew

[Steve Babiak]

Since they are investment properties, HELOC is for home (your principal residence) so drop the H and ask for equity line of credit on investment property.

But I don't think I would replace the existing loans given the terms that were supplied, unless you will be using the family lender to acquire more and that lender has limited capital to fund you so the payoff is needed first.