Rental Refi Did Not Work
I am kind of disappointed this morning since I found out yesterday that the refinance on the rental homes would not work. Apparently, my credit score is not good enough. Ever since 2008, it has been incredibly difficult to get credit so I will be focusing on getting out of debt instead.
Ultimately, it turns out that the net impact on the monthly cash flow won’t be all that different without the refinance. That is because I had to have 2 appraisals and one came in below the expected amount. As a result, I had set aside $10,000 to bring to closing in order to save about $650-$700 per month through decreased payments.
Now that the refinance won’t be going through, I will using that money to pay down a credit card balance in order to save over $2300 per year in interest. Once I get this card paid off which should be in the next few months, I will save almost $800 per month in cash flow which can be added back into the budget. So all is not lost with plan B.
Plan C
Then once that card is paid off and I get a little more credit card debt eliminated, my credit score may very well be in a better place that I could refi the rental houses, decrease my interest rate and my term. I don’t anticipate rates moving up any time soon. I would think that I have a year or more to get a better interest rate.
If not and rates start to increase, that would mean that the economy is heating up which will only help my retirement account investments in the stock market. So I look at it as a win-win.
With this behind me for the time being, I can now focus on getting the business transaction complete and meeting my 2 goals for this year which are losing weight and paying off debt. In fact, I am about to launch a blog solely devoted to working my way out of debt which should bring some increased accountability and motivation to the equation.
I will let you know when it is up and running.
Carnivals
Here are the recent carnivals that have included articles from my blogs:
Sorry to hear Jim. I’ve been wanting to refi my rental but have heard so many stories like yours about how difficult it is. I’ve decided to just hold on and try in 2014 since the Fed said they are keeping rates low through the end of next year.
Jon @ MoneySmartGuides recently posted..3 Ways to Save Money (A Lot of Money!)
Yes, I am going to give it some time as well. The interest rates on mortgages are unlikely to spike this year so I figure if I give it about 9 or 10 months, then I can try again.
I’ve been kicking myself year after year because I’ve been remodeling my home and unable to refinance. Every year I fear interest rates will be on the rise. Luckily they still haven’t. Hopefully, you’ll get your credit in order before your interest rate opportunities disappear.
Wayne @ Young Family Finance recently posted..Saving Money for a Puppy
I am sure hoping so. I don’t think it will take much to improve the credit score. Paying off some debt should be all that is necessary. I don’t have any problems with being late or defaults.
Sorry to hear about the refinancing. I’m thinking about it, but I’ve been hesitating because our income is much lower now and it’s so much trouble.
Joe @ Retire By 40 recently posted..Bizarre Dream & January Blog Roundup
There certainly is some paperwork hassle involved, but I tend to keep stuff well organized, so it doesn’t take long to gather it all up.
Many thanks for sharing your experience. Irrespective of their outcomes it is still a very good learning point for all of us.
Hope that as soon as you unload some more of the debt your score would be high enough to refinance.
Financial Independence recently posted..Rate of Return (ROI) on Investment – Real Estate Apartments
I am going to give it some time and see what happens. Maybe by the end of the year.