Rental Mortgage - GONE!

Two years ago this balance was $27,723.90. This was the mortgage on our old condo (now the rental property).

We were able to pay this one off in 2009 with some of the money my husband inherited after his mother's death. Being free of this payment has put this in property in a position where, even with the amortized loan through the HELOC, it has positive cash flow. Well...it won't this year with that huge assessment from the HOA, but in a normal year it would. This is a good thing!

So far I have had (can you hear my knuckles rapping on the desk) good luck with tenants. We still love our old condo. I get really nostalgic when I'm over there for one reason or another. I guess that is normal since I lived there for over 17 years. Moved in there when I was single, added a husband, then two kids. Don't get me wrong. We love living where we are. Our house now has lots of room, lots of storage and a huge yard. No one gets displaced when we have overnight guests, and we're never fighting for a bathroom. But the time, money, and energy it takes to clean and maintain might not be worth it as we get older. We plan to keep this rental for a long time....maybe even long enough to move back there once the rugrats get out of high school. LOL

Rental Property Refinanced!

Remember when I talked about combining the loans on the rental property into one?

With the offer from my HELOC lender, I was able to accomplish the very same result without all the hassle of going through a refi.

I didn't have to worry about the stricter lending guidelines for investment property. I didn't have to prove that the property is producing monthly income. I didn't have to accept a higher interest rate that most investment properties come with. And the setup fee for the loan conversion was only $100 instead of $2-3K that would have been inevitable with a traditional refinance.

The major bulk of my mother-in-law's estate was distributed in mid-November. My husband and I agreed that we would use $38,739.46 of his distribution to pay down on the rental property loans.

So we used the $38,739.46 by sending $26,133.27 to pay off the First Mortgage and sent $12,606.19 to the HELOC.

Let me tell you, when I call Bank of America to check the balance, that was the sweetest automated message I ever heard when the computer said, "Your loan has been paid in full." Look at this pretty ticker now! *BIG SMILE*






And here is what the HELOC looks like after adding the $100 fee:




Then I had the HELOC lender convert $73,000 of the balance to a 4.99% fixed rate amortized over 180 months. The monthly payment will be approximately $577.00. The other option was to set it up on a 10 yr. loan with a payment of $773.92. My intention is to make monthly payments of $774 based on the 10-year amortization. The property will cash flow with the $774 payment assuming the only other expenses I have each month are association dues, insurance and real estate taxes. But I like the flexibility of having a lower payment if there are months that I am between tenants, have major repairs, etc.

I'm still not sure what direction we'll go in with this property. Depending on what our current tenants decide to do at the end of their lease and depending on real estate market recovery, we might decide to put it back up for sale. If we do, we haven't invested much into getting these new loan terms put in place.

If we keep it and are able to pay it off in 10 years, it would be a nice little source of college funding when my 2nd grader is looking at college tuition in the year 2020.

Either way, I am so happy with this loan. If I have to be in debt, at least I now know that the interest rate is fixed and the payment is affordable. Oh! and don't forget the $500 Visa gift card reward the HELOC lender is giving me in a month or two!

Rental Mortgage Update - Nov. '09

Statements have arrived for the mortgages. Last month, $532.19 was shaved off the balance of this one!

This has been such a manageable loan for over 6 years, I can hardly believe I'm thinking about refinancing it into the fixed rate portion of the HELOC. I'm having a hard time deciding whether I should suck it up for the next 45 months to pay this loan off in full, or combine this with the HELOC balance when I convert it to a fixed rate for the next 10 or 15 years. I haven't made a final decision, so stay tuned!

UPDATED: Just heard that the Dems have all 60 votes for cloture on the Health Care Bill. I'm guessing Demcare is going to pass since, as I understand it, they will only need 51 votes to actually pass a bill. The inevitable higher taxes and higher insurance premiums have me scared to death. I'm leaning toward refinancing and lowering my monthly fixed costs.

Rental Mortgage Update

I'm still waiting for statements to arrive in the mail, but I checked online and found a copy of the statement that the postman is holding hostage at the moment. I need the motivation of seeing those balances go down even if by only the slightest amount.

Of course, the rental mortgage balance is the one that is dropping the fastest (percentage wise). $530.21 of the last payment was applied to the principal, leaving the balance of this loan at $26,665.46. It's also nice that my tenants are essentially paying this one for me!

Trying to develop a plan

After reading Liz Weston's article last week, I posted my blurb about inflation fears on Twitter. Liz actually tweeted me back suggesting that I might want to think about trying to get fixed rates on some of these loans. Then she blogged about getting a fixed rate.

That got me thinking....

We are expecting to get another $30-40K out of my husband's inheritance depending on when and how much his mother's home sells for. As soon as those dollars have been paid to the HELOC balance, I would like to start investigating a refinance of the mortgages on the rental property. I can't remember all the "rules" for mortgages on non-owner occupied properties, but I should have more than 40% equity. I know the rate will be higher than an owner occupied mortgage, but I don't know how much higher I should expect. Does anyone have any advice or insight on getting a mortgage for a rental property? In the meantime, I'll keep plugging away on these debts to make sure my credit score is worthy of a refinance when the time is right.

Another Mortgage

This is the mortgage on the rental property. It used to be our residence until we moved into our current home. We tried to sell the place, but in six months never even got an offer. Now I'm glad we didn't. I had lived there for 17 years, and once the kids are grown and gone and school districts don't mean as much to me, we might move back there. It's smaller and much easier to maintain. And as of right now, we have wonderful tenants. Last month's mortgage balance of $27.723.90 is manageable. The last time I refinanced I put it on a 10 year note with a fixed 4.5% interest rate. It will be paid off in about 4 years and the last payment knocked $528.23 off the principal balance. Today I owe $27,195.67. The only thing that worries me about this one is those two or three days at the beginning of the month waiting for the rent income to show up in my mailbox!