Refinancing Investment Property

[Sandhya Gorman]

I started looking into refinancing the mortgages on my investment properties- no cash out refinancing given that interest rates are low; my interest rates are b/t 4.75-5.25%.  It seems that closing costs are too prohibitive.  I'll save ~$150-200 dollars per month at a cost of nearly $6000.  Doesn't seem worth it.  Am I missing something?  I'd love to hear some perspective from this forum.

[Guifre Mora]

Originally posted by @Sandhya Gorman:

I started looking into refinancing the mortgages on my investment properties- no cash out refinancing given that interest rates are low; my interest rates are b/t 4.75-5.25%.  It seems that closing costs are too prohibitive.  I'll save ~$150-200 dollars per month at a cost of nearly $6000.  Doesn't seem worth it.  Am I missing something?  I'd love to hear some perspective from this forum.

There are some closing costs associated with the lender but the rest are fees from 3rd parties. Closing costs are closing costs nothing to do with the lender. Refi from 8% to 3% or 5% to 3% you will have the same closing costs +-.

It's a mathematical equation on your tolerance as an investor and if this transaction is in line with your short and long term goals. Invest a penny to earn a dollar.

Monthly saving $150. Closing Costs $6,000

6000 / 150 = 40 mo. / 12 = 3.33 years It will take you 3.33 years to recuperate 6K.

3.33 years 100% ROI

6.66 years 200% ROI

9.99 years 300% ROI