Variable Intrest, 20 Year Amortization, 5yr term

[Paul Thompson]

Just refinanced my first BRRR property. Loan is amortized over 20yrs with a variable interest rate and term is 5 years. What are my options if interest rates shoot up making my monthly payments larger? I don’t want to be in a situation moving forward where all my cash flow is wiped out due to higher interest rates. Thanks

[Andrew Postell]

@Paul Thompson Ok, that makes sense to me.  I would still recommend using Fannie/Freddie loans in the beginning.  The portfolio loans are always available. Meaning, having portfolio loans now doesn't increase your chances of getting them later.  Fannie/Freddie loans will carry a fixed rate, they will have a lower rate, and they will help you qualify for other loans later.

Now, if a bank is telling you they can't refinance because of "seasoning", is that because you purchased it with cash?

If you did not purchase with cash there is no seasoning requirements.  If the bank is stating that there is....that is because they have an extra rule on top of Fannie/Freddie loans.  We call those extra rules "overlays".  So it always important to work with banks with no overlays.  It's not always easy to find those banks but they are out there.

If you did buy with cash let me know and I can show you a solution to that too.  Thanks!