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Refinance new mortgage?

Profile picture for lainey4261
Contributions: 16
We have a new $130,000 mortgage (Aug) on a investment property at 6.5%. We have @ 80% LTV, 700 FICO and no prepayment penalty. First, could we refinance a mortgage that young and second, could we get a 5.5% or lower mortgage at today's rates on an investment property with 0 points? With 0 points, how much would we expect to pay in closing costs and how long would we have to hold onto property to break even--we plan on @ 10 yrs? Is it worth refinancing? Thanks!
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November 08 - US
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Answers (6)

Profile picture for LoanModSpecialist
Real Estate Agent
Contributions: 375
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Since September 2009

your dreaming to get 5.5% on an investment with no points.  stay where you are and say thank you for the rate you have.
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November 09
Profile picture for funds2
Mortgage Lender

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Whtie Picture.
An investment property is not a second home for mortgage financing purposes. Very specific guidelines for a second home that an investment home/property by its nature does not meet...i.e. receives rental income, not 50 miles+ from primary residence, etc.
lainey4261,
Ten years is a long time to hold onto a property, and if you fell short of that goal by a few years you would have little benefit if any from refinancing. If rates ever drop to 5% or below it might be worth revisiting refinancing if you were still 5-6 yrs from selling property.
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November 08
Profile picture for Gregorio Denny
Mortgage Lender

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Since January 2009

There is a 3 point adjustment on an investment property at 80%, and your LTV will be 80% at best since it's so recent. You could get a 5.5% rate paying a small origination or broker fee and closing costs, but as others have said, you would have to do the break even math to see if it will benefit you. 

 What state are you in?
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November 08
Profile picture for White Picture
Contributions: 1953
Zillow All-Star

Since March 2009

If you pay $821.69 a month at 5.5% with 30 years term of $132k mortgage and want to keep your property for 10 years then the balance of the refinancing mortgage is $97,436 VS $110,208 of the balance of the actually mortgage (at the 120th month), you save $12,772 in 10 years.
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November 08
Profile picture for White Picture
Contributions: 1953
Zillow All-Star

Since March 2009

Hi lainey4261,
* Some of the banks will give to you the investment rate same as primary resident rate if the investment is your 2nd home (citimortgage).
* I don't know @10 years is the mortgage life term or the time you want to keep the property.
* Assume your loan is 30 years term then:
_ At 6.5%, the monthly PI payment is $821.69
_ At 5.5% of $130,000 + $2000 Closing cost, total of $132k mortgage (adds the closing cost into the mortgage), the monthly PI payment is $749.48, beside of you save $72.21 a month, the principals break-even is at the 73rd month.
If you keep paying $821.69 a month, then your mortgage life is 291 months and half (you save 68 month and half) , the principals break-even is at the 20th month.
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November 08
Profile picture for shapiroamg
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Since September 2009

6.5% is not bad for an inv property. Put a request on the zmm and see what you get. come back here with your quote ID number and let the experts see if its worthwhile. My best guess is that you might be able to get this into the high 5's . Probably not worth it.

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November 08
 

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