Real Estate Planning Help Needed

I’ve lived in my house for about 10 years. According to the current prices for similar houses in my neighborhood I have about $40-45,000 equity in my house. I need to refinance my mortgage because of a vastly overinflated interest rate. I’m thinking of moving, because I’d like enough land to keep my horse with me, rather than continue to board him out. My three options, as I see them are: A) Refinance my current mortgage to a 10 year and own my house outright sooner and continue to board my horse. B) Keep my house as rental property (it’s a small three-bedroom in a lower-middle income neighborhood 10 minutes from the biggest car manufacturing plant in the country, should be easy to keep rented), refinance and take equity to buy enough property to keep my horse. I have no problem living in a mobile home. I should get enough rental income to cover the mortgage on the house plus help out with my property, and should own both outright around the time I hope to retire, giving me some retirement income. Or C) Sell my house, buy the new property and not have the hassles of being a landlord.

I’m currently paying $100/mo in horse board, which with these interest rates would help a lot toward a new mortgage if I kept him with me. Land prices are going up a lot in Middle Tennessee, so if I want to eventually have more than my 1 acre, I need to move soon.

Does anyone have any experience or knowledge in this area?

Thanks for any input.

StG

First, just go for the re-finance. You may never see these rates again and by lowering your payments drastically, you will have time (and extra money) to consider your other options.

Renting always seems like a good idea, but most people who do it learn quickly the drawbacks. Late or non-rent payments, damages to home and property, complaints “the bathtub needs new caulking” etc. etc. There are some exceptions, but it can get ugly very quickly…even worse if you rent to family or friends.

You said you could refi and get it paid for in ten years…you know that the value of the property won’t go down, so that really does sound like a good plan. Plus, if you decide to go for a new home somewhere, that piece of almost paid for land will look good to any bank or mortgage broker!

Again, my two cents is to re-fi and then take your sweet time to figure out your next step.

Those are good thoughts. Also, you may want to understand that most mortgage companies don’t offer 10 years for loans under $250k and sometimes only for Jumbos. And then they’re adjustable animals and I don’t think you want to play w/the market now on rates.

We are in the process of refinancing our primary and a rental. We got 4.5 on primary! We currently have a 15 year loan and have 12 years left but are refinancing again at a 15 due to the reasons cited above onthe 10 year but will be amortizing and paying it on a ten year schedule.

I think you refi first then deal w/the other issues later. Markets change quickly and drastically so you never know with respect to the rental comps in your area and how they will be affected.

(I’m a paralegal specializing in
real property law…acquisitions, transfers,
land use, etc)

Thank you both for your input. My thought is, if I don’t decide what I want to do in the long term and do it, I’m looking at potentially higher interest rates, more fees, etc. The more financial transactions I do, the more cost I incure. If I refinance and have a couple thousand in refinancing costs, it won’t make sense to sell the house for at least a couple years to recoup the savings from the interest rates. If 10 year fixeds aren’t available I can try for a 15 yr fixeds and possibly pay off early. I’m not interested in lowering my payment, and can afford to increase it if it’ll help me out with my long-term goals.

Eilsel - Welcome to the boards! Can you tell me about your experiences in owing rental property?

StG

The basic rule of thumb is if the rate is 2% lower, however if you’re refinancing down to a 15 from a 30, that goes out the window and the long term benefits are better. You may also want to contact your mortgage company and ask if they will do a mortgage modification agreement in order to lower your rate. Otherwise you will be refinancing elsewhere. Some lenders do this, mostly private banks but you never know. All they can say is “No”

My experience in rental property is not good. Why? BEcause we rent to my inlaws and my mil drives me crazy. Also, they pay us $500/month and our mortgage is $1200. So it’s basicallyus, supporting/helping them.

I do know, however, from doing some landlord/tenant work that as you may or may not know, the laws are to protect the tenants and not the landlords. Evenif you have a scrupulously (sic) prepared LeaseAgreement, they can squat there for forever.

Eilsel - My condolences about your free-loading in-laws. Fortunately, I am in-law free. My parents had a rental home from which they had to evict a tenant - it was a mess, although the laws for that very from state to state, I believe.

Anyone else have any ideas?

StG

…and people wonder why I drink…THAT is why. Actually my fil is WONDERFUL…it’s…(((shudder))) her. ROFL