Refinancing Real Estate Investments
by: Steve Gillman
Why should you consider refinancing real estate investments instead of selling them? Maybe you've owned a rental property for years, you've paid down the mortgage, the value is up, and you want to cash in on that equity. You will do better to refinance. Here's why.
There are two problems with selling. First, selling means paying a large capital gains tax. You can avoid this if you reinvest through a 1031 exchange, but then the point is that you want your money, right? Second, you'll be giving up your inflation-indexed retirement plan. A good rental property generates more income as rents go up.
Refinancing Real Estate Investments Is Better
If you refinance, you can get much of your gain out of the property, without paying a penny in taxes. You see, borrowing money is not a taxable event. Take your loan proceeds and spend them however you want, and still keep your rentals. Doesn't that sound better than losing a big chunk of your equity to taxes?
Now, let's look at an example. We'll suppose you have owned a small apartment building for several years. Let's say you bought it for $340,000, with a down payment of $80,000. Interest rates at the time were at 9.5%, giving you a payment of $2,106 monthly on the balance of $260,00 (30 year amortization).
The property is now worth $560,000, and you owe $220,000. Your cash flow is around $2000/month. Now, how do you get at some of that equity? If you sell, you will give up the income, AND pay a big part of the profit in taxes. What happens if you refinance?
If a bank will loan you 70% of the value, that would be $392,000. Pay off the first mortgage, and you are left with $172,000. You can spend it any way you want, and no taxes are due.
It gets even better, especially when interest rates are low. If the new interest rate is 6.5%, your new payment will be $2295. In other words, you get $172,000 to spend any way you want, and you still have over $1,800 cash flow each month, from an inflation-indexed retirement plan.
Here is an even better scenario: Spend $50,000 of the loan for high-return upgrades to the property, such as carports and a laundry room, and raise the rents. You could have $122,000 left over to spend any way you want, AND have higher cash flow than before! Isn't that sound better than selling your retirement plan? When you want that cash, consider refinancing real estate investments.
About The Author
Steve Gillman has invested in real estate for years. To learn more, get a free real estate investing course, and see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com.
|
Refinancing After Bankruptcy - Tips On Refinancing Your Home Mortgage After A Bankruptcy
Refinancing After Bankruptcy - Tips On Refinancing Your Home Mortgage After A Bankruptcy
by: Carrie Reeder
Have you filed bankruptcy since you bought your home? Are you now looking to take advantage of lower interest rates by refinancing your home? You will probably soon realize how much more difficult it is to finance or refinance a home after a recent bankruptcy. It is not impossible though. There are many companies online that will help you refinance your home.
Here are some tips to consider when refinancing after a bankruptcy:
Even though interest rates have dropped, you may not be able to get a lower interest rate than when you bought initially - If you had decent or good credit when you bought your home originally, even though interest rates have lowered recently, you may not be able to qualify for an interest rate any lower than you had when you bought your home originally. With a recent bankruptcy, your interest rate is going to...
Refinancing After Bankruptcy - Tips On Refinancing Your Home Mortgage After A Bankruptcy
Refinance > Refinancing After Bankruptcy - Tips On Refinancing Your Home Mortgage After A Bankruptcy
Second Mortgage/Home Equity vs. Refinance
Second Mortgage/Home Equity vs. Refinance
by: Benjamin Ehinger
Why should you take out a second mortgage or a home equity line of credit instead of refinancing?
Well,???You Shouldn?t!!
Why Not?
1. Second Mortgages usually have an interest rant that is twice or even three times as high as your first mortgage rate.
You can refinance instead and keep a very low rate.
In the long run a second mortgage will just cost you money in interest charges.
2. Home equity lines of credit are designed for mortgage account executives (salespeople) to sell you on using it like a credit card attached to your home.
They will try to convince you to use it over and over again.
3. A refinance loan is better for the equity in your home.
Very few companies will refinance your home at 100% of it?s value without forcing you to take out a second mortgage.
You don?t want to use 100% of your equity because...
Refinance > Second Mortgage/Home Equity vs. Refinance
Building Home Equity and Saving
Building Home Equity and Saving
by: Troy Francis
Today?s borrowers refinancing to shorten the term of the mortgage. However even at low rates, a shorter term means a higher monthly payment. The benefit is that you'll build up equity faster and pay far less in total interest over the life of the home equity loan.
Consider Tony Nelson, 49, a real estate broker and his wife Merrilyn, 56, a psychotherapist. Recently, the couple took out a 15-year fixed rate loan at 6.75% to replace an 8.13% ARM with a 30-year term. Their monthly payment jumped by $200, but now they will own their own home outright by the time they retire. Smart! Also the total interest on the 15-year loan will come to $95,447, vs. $222,234 on the remaining life of the ARM -- and that assumes their adjustable rate would have held steady at its current 8.13%. "This is forced savings," says Tony. "When I retire, we can scale down and take equity out of the house as we want to."
Refinance > Building Home Equity and Saving
Finding a Mortgage Refinance Advisor
Finding a Mortgage Refinance Advisor
by: Jennifer Hershey
If you are looking to refinance your home for a lower rate, or you are interested in a refinance with cash out to do some home repairs, buy a new car, etc., you may want to consider finding a mortgage refinance advisor.
There are actually two ways you can go about refinancing your home. The first would be to do the shopping around for a refinance on your own. The second way would be to locate a mortgage refinance advisor.
A mortgage refinance advisor. Otherwise, known as a mortgage loan officer or mortgage broker are not at all hard to find.
The internet is perhaps the best resource for tracking down a mortgage refinance advisor. There are literally hundreds of them right in your own back yard, and the internet would be by far the best way to begin your search.
Once you have found a mortgage refinance advisor, don?t stop there, shop around. By shopping around with a...
Finding a Mortgage Refinance Advisor
Refinance > Finding a Mortgage Refinance Advisor
Bad Credit Mortgage Refinance
Bad Credit Mortgage Refinance
by: Jennifer Hershey
If you are looking to refinance your mortgage but believe you will be unable to because your credit may be challenged by late payments, bankruptcy, charge off?s, or unpaid medical bills to name a few, don?t worry, there is hope.
There are literally thousands of lenders across the United States that specialize in all different types of mortgage programs for people who have challenged credit.
They are not the typical banks you find down the street from your house that deal with perfect credit only. Nor are they hard money lenders that charge outrageous mortgage rates. They are known as wholesale lenders.
Wholesale lenders work closely with mortgage brokers. Mortgage brokers are the people who work with people looking for mortgages in the way of counseling, educating, and locating a loan for people who find themselves in a unique situation and have trouble finding a loan on their own...
Bad Credit Mortgage Refinance
Refinance > Bad Credit Mortgage Refinance
Refinance
This page loaded in 0.03384 seconds.