When is it smart refinancing your mortgage loan? A simple yes or no to answer whether your mortgage loan must be refinanced is not possible. Picture your real estate investing venture for a second. Whenever you come across a deal, do you make a simple yes or no final choice about buying an investment property without careful consideration? I sure hope you don't for the sake of your financial well-being.
The question should it be the better choice to refinance depends on a variety of scenarios as with all other real estate deals. And like with any real estate investing opportunity, some of these refinance scenarios are deal breakers. Some deals are absolute no-brainers while some other deals involve a ?maybe but only if? answer.
Let us look into a few of these situations and I will give you my suggestions about how to deal with the predicament of whether or not refinancing your loan is a good idea or the opposite. Let?s look at debt for starters. In case you follow traditional advice, refinance to a lower rate after which pay off debts? For me, this is a deal breaker. Do not do it. You are better off making use of other people?s money to clear out debt (i.e. your month to month earnings from tenants in your own rental properties.)
Up next, to help cover rehab or remodel costs, should you refinance a loan? Even though I am against for it on this particular scenario, I wouldn't refer to this one a deal breaker. In today?s market, you should have no problem purchasing real estate properties well beneath market value. This is the reason your final offer price needs to include these repair costs.
If this is your own private residence, you intend on staying in the home for many more years, and you want to raise your quality of life; then mortgage refinancing gets a small nudge towards a yes. However, it is still a very small nudge closer to yes. And naturally, you still must take into account all the numbers and expenditures before continue with the refinance.
Finally, would it seem sensible to refinance a loan if your purpose is to reinvest in more cash flow properties? This is the one situation where I'd say yes to remortgage the loan. However, this scenario only is smart in certain situations so yes, there is a catch. Also, you should do your homework just like any real estate investment deal.
The investment should pay you greater than the cost of the refinance. So make sure your costing is correct. Will this remortgage not cost you money and rather make you money? If that answer is a yes, then my answer is also a yes.
You must steer clear of getting caught up in all the hoopla about low refinance rates. It will not seem sensible to refinance your mortgages nine out of ten times. And the one occasion it does seem sensible, you should be using that extra income to acquire more cash flowing investments.