Refinance my rental?

[Nick Brubaker]

Hello all,

I am trying to decide if I should jump on the historically low rates currently and refinance my SFH rental. I put financing on it last year (15-year fixed) at a 4.375% interest rate. The rate I currently have locked in (also 15-year fixed) is 3.0%. The closing costs (aside from taxes and insurance) are about $2900, which isn't bad. The problem is the house value is not high - the loan balance is $86k - so it will actually end up taking about 3 years to "pay off" the closing costs with the savings from this lower rate. I'm pretty confident I will be holding the property longer than that if not much longer, but plans could change over 3 years. One reason I don't foresee selling it in the next 3 years is I plan to do a major renovation on the property before I do sell it and I don't see myself taking that on in the next few years. Our next big financial move will be buying a new primary residence in a couple years (while keeping the current residence as an additional rental). I expect I will occupied by that (which may include renovation projects on either of those houses), my young family, and a new career I have recently begun. I don't expect my current tenant to remain for 3 more years, but it's probably more likely I will install a new tenant than decide to go forward with the renovation/flip and sell. Anyway, I think 3 years is a long time just to break even, but I also expect to own the property longer than this and would hate to go forward paying 4.375% when I could be paying 3%.

What do you all think?  Is there anything else I should be considering?

Thank you!

Nick