Refi Question
Here's our situation: We bought a house last year for $350k in Sonoma County. It is a 2BR 1BA house with an extra bedroom & a large yard. Through a mortgage broker we were able to finance the house with a first mortgage for $280K @ 6.375% 30 Yr- ARM. It is now financed by Countrywide. The 2nd mortgage for $70K @ 10.25% through Aurora Loan Svcs. Last week, our mortgage broker suggested that we refinance the 2nd loan through a HELOC with Citibank to cut down on our payments $200 less each month-from $627 to a target of now only $400. She mentioned this new program with Citibank would not cost me a penny, only that it would cost me about $300-$500 if I decide to refi before the required 3 years Citibank requires. Our plan is to combine both loans by August 2005. The penalty Citibank will assess, the mortgage broker will absorb-she says. My questions are:
1.) Does it make financial sense to do the HELOC refinance right now?
2.) What type of loan should we refinance to next year for both loans?
Our plan is to purchase a bigger house & keep this property as a rental income. Another alternative is, if we continue to live here & suppose we can get a HELOC from this current property, we want to purchase a duplex up to a triplex, either here or in Los Angeles County. Plan to buy that multi-family unit, hold it for a couple of years, sell it then buy a bigger property & so on & so forth.
Any recommendations, suggestions would be greatly appreciated. Also, I would like to get into real estate investing right now, but with the market here in Sonoma County way up high I think the only way I can do it is by waiting until next year when I get refinanced. Tell me I'm wrong & how I can do it at this point. No cash reserves, FICO score in the 650's, credit good.
Thank you all for your time!
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