Brigham City, UT · Member since 2019 · 10 posts · 0 votes
I have a 30 year mortgage, with about 20 years left. Putting the BRRR method aside, i want to start generating income from my house, when we move. Although i could make an okay cash flow now, would it be wise to refinance my home to another 30yrs when i rent it out. There by increasing my cash flow?
Brigham City, UT · Member since 2019 · 10 posts · 0 votes
7y
@Brian Van Pelt thank you. More numbers might make more sense. If i refinanced i should be able to get $100 more in my pocket per month. If it cost me $3000 to refinance my house, than my cash on cash return on refinancing alone is 40%. $1200/$3000=.40 x 100 is 40% that looks great. But that stretches out my debt, and i spend more on interest. As a home owner i feel that paying off the debt is best. As an invester, increasing cash flow seems like the way to go. I'm putting myself in both directions and not sure what to do lol
@Bryce McBride Refinancing Does not increase your cash flow unless you significantly reduce your mortgage.
Even if rates weren't lower, after a decade you've paid the balance down. The big "con" is that you're resetting to year 1 of 30, but the P&I payment on $260k (ie, balance now after a decade) will be less than the P&I payment on $300k (ie, when he bought it) even if the rate hypothetically stayed the same.