House Hack Refinance

[Spencer Krautkramer]

I'm looking into getting my first house hack and determining how much I should buy down my rate (and when the break-even time period is). I know I will need to live in the property for at least a year and I don't see interest rates going down significantly in that time period - after that is unknown. Is it better to refinance while you still live there to keep an owner-occupied loan with a lower interest rate, or would most people move after a year (for a better living situation/job/property) and refinance later with an investor loan once they've hit 20% equity and rates are lower? Also, do most people try to take out a HELOC before moving so that they have it for future projects?

[Alan Asriants]

Hey Spencer, if you keep the home as a primary you will have the best rate and terms. you can also cash out up to 95% in some cases. 

I usually don't buy down the rate. The way the math works when I see it, is that if rates drop in 3-4 years, you are better off refinancing then and not paying points today. 

I think in 3-4 years a lot can change and rates can settle down which is why I dont buy it down. 

At the same time, buying down the rate will save you money and cash flow now and usually refiing your primary into an investment loan will cause your rate to go up. Also if you used low down paymnt you might need to make sure you have enough equity to refi into an investment loan. 

Normally I would say its not worth it since with primary you have the best rate and terms. 

Good Luck!