Hoping to get some advice on a situation that occured due to some emotional attachment to the property and not enough planning ahead of time.
During residency purchased a home for $200k with 5-1ARM at 2.875% physician $0 down loan. Liked the comminity, neighbours, schools, etc. But after finishing residency this year moved to another state 2000miles away for wifes fellowship in AZ. Initially put house on the market, but werent getting offers that we were comfortable with (keep in mind the offers would have given us $15k profit). But at the time felt the offers were coming in too low and also felt attached to the home and possibly moving back was in our heads. So decided to turn it into a rental (rented within 1month). Currently we break even (if including maintenance costs). So at least building equity at expense of the renter.
Issue is the 5-1ARM is going into variable rate in May 2017. Bank sent a letter anticipating rate to go to 3.7%. Although the ARM terms allow for rate to increase by 4%.
Another issue I didnt account for is that its harder to refinance a rental property.
Currently looking at a 4.625% 30yr fixed with same bank as original mortgage.
Plan to rent for at least 2yrs.
So should we refinance now in anyicipation of rising interest rates?
Or keep with the ARM and hope the rate doesnt increase above 4%.
In any case we are actually loosing money with this process. Just trying to minimize how much.
During residency purchased a home for $200k with 5-1ARM at 2.875% physician $0 down loan. Liked the comminity, neighbours, schools, etc. But after finishing residency this year moved to another state 2000miles away for wifes fellowship in AZ. Initially put house on the market, but werent getting offers that we were comfortable with (keep in mind the offers would have given us $15k profit). But at the time felt the offers were coming in too low and also felt attached to the home and possibly moving back was in our heads. So decided to turn it into a rental (rented within 1month). Currently we break even (if including maintenance costs). So at least building equity at expense of the renter.
Issue is the 5-1ARM is going into variable rate in May 2017. Bank sent a letter anticipating rate to go to 3.7%. Although the ARM terms allow for rate to increase by 4%.
Another issue I didnt account for is that its harder to refinance a rental property.
Currently looking at a 4.625% 30yr fixed with same bank as original mortgage.
Plan to rent for at least 2yrs.
So should we refinance now in anyicipation of rising interest rates?
Or keep with the ARM and hope the rate doesnt increase above 4%.
In any case we are actually loosing money with this process. Just trying to minimize how much.
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