refis in q1 reduce payments by $2.5b in 2009

dave_donhoffApril 30, 2009

REFINANCES IN FIRST QUARTER REDUCE MORTGAGE PAYMENTS BY $2.5 BILLION IN COMING YEAR

http://www.freddiemac.com/news/archives/rates/2009/1qupb09.html

PARTICULARLY interesting is the data table provided...

Dave Donhoff

Leverage Planner

Here is a link that might be useful: REFIS IN Q1 REDUCE PAYMENTS BY $2.5B IN 2009

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dave_donhoff

Ballast

    Bookmark   May 1, 2009 at 5:54PM
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devorah

Wait - let's not add the ballast quite so fast. I have been shy about asking you this Dave, partly because I hate to impose on your time and partly because I have to reveal what a dork I am.

Last fall when we bought first one and then a second triplex, I asked about the mortgage broker's fee because that was something new to me. I still wonder about it because the American Trust mortgage broker I dealt with found me a mortgage through American Trust Mortgage who sold it to American Trust Bank. Seems awfully convenient. Fees were at the top end of what I understood to be usual, and I am a little reluctant to deal with these people again

But, I read in the paper that rental properties up to a triplex in size could also benefit from refinancing. I don't know how to approach this. I am paying about 7 1/2% because these are not owner occupied. I am not sure that I can afford to pay all the fees again that I paid last fall. I don't even know where to begin to investigate this since I am in a different state. Could you give me an idea of how to begin to see if this is something that would be beneficial to me?

    Bookmark   May 2, 2009 at 12:27PM
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dave_donhoff

Hi devorah,

You are DEFINITELY NOT a 'DORK' (unless you mean that in an endearing way... which I fully embrace myself ;~)

7 1/2% because these are not owner occupied.

HIGHLY likely you can get that dropped sufficiently enough to have the deal make sense.

I am not sure that I can afford to pay all the fees again that I paid last fall.

I'd suggest looking first at whether there is any way to have the properties themselves pay for their own leverage refinancing from equity... then their own operating income will cover their costs, *and* the monthly savings from the interest reductions will "catch up to break even" on the initial costs against equity.

With primary residences the maximum breakeven point is usually best-advised at 3-5 years, simply because of the statistical realities of people's "life happens" creating unforeseen reasons to move (and thus sell.)

With rental income properties... *ESPECIALLY* self-supporting non-local properties, the unforeseeable "emotional" causes of a forced sale drop dramatically, and the statistical longevity of ownership stretches out, so that a significant reduction in carry costs (dropping the payments, increasing the operating positive cashflows) can make much more sense even when the breakeven on the refi takes longer.

I don't even know where to begin to investigate this since I am in a different state. Could you give me an idea of how to begin to see if this is something that would be beneficial to me?

I'd suggest working with a nationally licensed advisor (or at least one licensed in all the states you are concerned about,) preferrably one with investment property experience themselves. Of course, shamelessly, that describes ME on point... but there are certainly others (not many... but there are ;~)

Cheers,
Dave Donhoff
Leverage Planner

    Bookmark   May 2, 2009 at 3:24PM
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