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Auto Refinance
You have probably heard of auto refinance before. Or simply refinance.
The term "refinance" actually refers to a financial situation wherein a
borrower finds financing to pay off a current loan. Refinance is often put into
practice in...
How to Refinance Your Home
Refinance Your Home - There are several reasons why you should consider
a refinance mortgage on your home loan. When you refinance your home, you can
cut your monthly mortgage payments. In addition, you can tap into your equity,
or your...
Refinance Mortgage Rate Calculator: Math Is Not That Hard
Refinancing is a smart move if you want to lower your monthly payment and overall interest bill. With refinance mortgages, you are also able to change the term of the loan to a shorter one so you can pay off the loan earlier and save more on...
Refinance Your Car Loan - 3 Tips For Refinancing Your Auto Loan Online
Refinancing your car loan is an ideal way to lower your interest payments or reduce your monthly payments. By using online auto loan lenders you can be assured that you are finding the lowest rate. To be sure you are getting the best terms, follow...
Why should you refinance?
Refinancing has become a valid option for many individuals with high interest rates on their mortgage. Refinancing is essentially a replacement loan, with a different lender and (hopefully) a lower interest rate.
So why would you choose to...
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Rental Property - Refinance, Don't Sell
You own a rental property for years, and never see the "big pay-off." Is it time to cash in on your investment, now that you've paid down the mortgage, and values are up? Maybe not.
The Problem With Selling
Selling means you'll have to pay a large capital gains tax. This can be avoided if you reinvest through a 1031 exchange, but then the point is that you want your money, right? Also, a good rental gets more income as rents go up. Do you want to lose this inflation-indexed retirement plan? What's the alternative?
Refinancing Rental Property
Have you considered that if you refinance, you can get much of your gain out of the property, without paying a penny in taxes? Borrowing money is not a taxable event. You can take it and spend it however you want, and still keep your rentals.
Let's look at an example. Suppose you have owned a small apartment building for years. You bought it for $240,000, with a downpayment of $40,000, and mortgage payments of $1650 monthly
on the balance. Now it is worth $400,000, you only owe $120,000, and your cash flow is around $800/month. How do you get at that equity?
A bank will probably loan you 70% of the value, or $280,000. After paying off the first mortgage, you are left with $160,000. With todays lower interest rates, your payment on the new mortgage will be about the same. At most you might lose $50/month in cash flow.
An even better scenario: Use $40,000 for high-return upgrades to the property, such as carports or laundry rooms, and then raise the rents. You could have $120,000 left over to spend any way you want, AND have higher cash flow. Does that sound better than selling your retirement plan? Don't sell. Refinance that rental property!
About the Author
Steve Gillman has invested real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com
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