Refinancing our rental

[Uncle Rufus]

We rent out our old house in Maine with 7 years left on a 12-year, 4.5% mortgage. Cash flow is negative, so I gotta ask, should we keep the loan or refinance for lower payments?

 

[retireearlydreamer]

If today's rates dip below 4.5%, think about refinancing. Doing so could lower your monthly payments and give your wallet a bit of a break. Just remember to consider the closing costs and how long it'll take to even out. A refinance calculator can really help you see the total savings.

 

[FrugalLyf]

We rent out our old house in Maine with 7 years left on a 12-year, 4.5% mortgage. Cash flow is negative, so I gotta ask, should we keep the loan or refinance for lower payments?

That can be a tough call!
When deciding whether to keep your current loan or refinance, the first thing you need to look at is the cost of refinancing.
Closing costs can be thousands of dollars, so you need to figure out how long it'll take for a lower monthly payment to offset these upfront costs. That will be your breakeven point.
Also think about the new loan term.
A lower interest rate on a longer loan might save you money each month but could end up costing you more in total interest over the long run.
Since you only have seven years left, a 30-year mortgage might not make sense.
Ultimately, you have to run the numbers to see if a refinance is the right move.

 

[jeffrv-n4d]

Make sure your rental pays you. If it doesn't after some adjustments, consider selling....