Playing The Mortgage Game
I have two properties. One is worth 125K with a 100K mortgage, 30yr at 5.875%. The other is worth 90K with a 62K 1st 7yr balloon at 4.875% and a 11K equity line currently at 5%. I am pondering the idea of using shorter term notes to increase cah flow. I could get a 3yr arm no cost at 4.375%. There is also a thing my mortgage broker likes alot called an option loan. It is adjustable monthly and currently at 1.65%. The option loan can never go up more than 7.5 % I plan on keeping both properties indefinitely. They currently cash flow for $300 and $200, respectively. Does anyone have any thoughts on the risks and other strategies?
If you dont plan on selling, then you are doing the right thing now. I personally think that interest rates will go up in the next year or two, so variable interest in my eyes would be risky, considering you dont plan to sell. If you want to increase cash flow go to an interest payment only loan, and then pay off the principal with irregular payments if you dont use the monies. If you do decide to go with the option loan, make sure you check out the exit points if the rates should go up.
Good Luck,
Kyle