I am 20 yrs old I bought a duplex 4 months ago for 147,600 its appraised at 148,000 so I got it at top dollar. I got financing on 80/20 80%@7.5 adjustable rate (will go up in 2 years guaranteed) and 20%@10.75 fixed rate. I will be paying interest for the first 2 months. I am losing $200 on this monthly w/ tenants living there. It's suppose to be my primary residence. Refi penalty for the 80 loan is $3600 and no penalty for 20%. So my question is I got a loan on stated income, I figured I am losing $200/month*24=4800 in 2 years interest only from my own pocket. If I refi now $3600 penalty and maybe $3000 closing cost (estimation) so that's $6600 loss which I can live with 6600-4800=1800 difference I can live with that. But if I refi 30 yr fixed rate I have very low income i am a college student can I get possibly better rates to lower my down payment, I want to refi 0% down fixed 30yr rate is that possible? I want some advice plz I don't want to go bankrupt in 2 yrs when rates go up!
2006-09-24 11:09:54 · 2 answers · asked by Dispirited 2 in Business & Finance ➔ Investing
I'v been reading lately on the internet about
the dangrous 0% down ARM loans mortgage companies
give out so easily, I thought I was just a lucky one
pft, no way, I got caught into it. But I want to keep
the property I don't want to sell. Are my numbers correct
or am I just a bad dreamin investor wannabe? My credit
score when I got the loan was 700, I'v been paying
everything on time so it should have gotten up there
I hope I can get the fixed loan. I deeply appreciate
your advice. Thank You in advance
2006-09-24 11:10:03 · update #1
Lots of pros will help you
2006-09-28 10:15:07 · answer #1 · answered by Anonymous · 0⤊ 0⤋
I am a real estate broker, allowed by law to broker loans but it is not what I do for a living. However, having invested in real estate for 27 years, I know my way around the rental housing and financing circuit.
By declaring your intent to move into the house and then not doing so, you face potential legal consequences. If you are able to move into one of the apartments in place of a tenant, then you could lower your expenses (you wouldn't have to pay make the rent payment for the place where you live now) as well as remove the legal risk.
Failing that, if you can improve the units so that they will bring you more rent, without costing you much money, that would help your cash flow as well as any future efforts to refinance. Lenders like to see a property with cash flow.
Should you try to refi now? I don't think you would be eligible for a loan that would significantly improve your position. The best situation would be if you can hang on long enough so that the property will increase in value, and perhaps qualify for a conventional loan. Such a loan would lower your costs by a huge amount.
Since the idea of spending $6600 to refi doesn't bother you, then clearly you should be OK for the next couple of years. In that time, if the economy booms, you may find that the property has appreciated enough to get that conventional loan. If, on the other hand, the economy tanks, then the good news is that interest rates may fall further, which may also enable you to do a beneficial refi.
You're in a tight spot and I don't see a quick-and-easy way to financial comfort. Don't panic - these things usually have a way of working out. But meanwhile, try to live as modestly as possible, build up some cash to cover any unexpected vacancies or maintenance needs, and provide excellent service to the tenants. They are paying your bills right now.
Best of success.
2006-09-25 11:51:12 · answer #2 · answered by Thinker 5 · 0⤊ 0⤋