I think I made a mistake!!!

Hello everyone,

I was a REAL beginner when I purchased my first property, an out of state duplex. I hired a property manager and received $80 dollars a month in positive cash flow. Since then my 1st mortgage jumped 1% every six months. What was first a 6.7% rate is now 8.7%!!

The house is not in an appreciating neighborhood (maybe about 3-4% a year). I can’t take out a HELOC because its non-owner occupied and a 75% loan to value won’t give me any cash.

What should I do? Any wise advise from you pros? ???

Refinance to a fixed rate NOW!!!

Worst case is that you’ll need up with a small negative cashflow. But with a fixed mortgage amount, you can steadily increase the rents so that you’ll be able to come out in the long run.

Next best option, SELL. Lick your wounds and move on.


Thanks… I feel terrible - it was my first buy! I tried calling the broker that made the deal. When he first told me about it he swore that we would refinance - for free - after six months. After 8 months of calling him with no action I see that I should not go through with anything before I sign.

Thanks for the advice - I don’t see anything else I could possibly do except maybe offering one of the renters a lease to purchase option.

Same ol’ motto, live and learn!

Hi there again,

Well, I called a bank to refinance and basically told them that the property was my second home… needless to say I feel bad about this as it is not a second home and I have no intention of ever living there. But I can’t get a non-owner occupied loan because I need 20-30% equity into it.

So, the bank said no based on the fact that it is a duplex and because one side is rented they have no loans for a second home that has two units.

So… where does that leave me now? :-\

Any ideas on who to go to to refinance? And do you think its ok to continue with the “second home” story???

claiming a duplex is a second home is a pretty weak and most doubtly is not going to fly unless its on Cape Cod, in HI or some other upper end resort location.

as for refi, I would post over in the finance section of this forum.

you need to find a competent mortgage broker who deals in that state.

also read “how to save thousands on your home mortgage” so you don’t get taken again.

<<And do you think its ok to continue with the “second home” story???>>

IMO, it’s NEVER OK to lie to lenders to get your own way. It’s deceitful and loan fraud! Sure people do it, but that doesn’t mean that it’s right…I’m a “do the right thing and it will come back to you” kinda guy. I try to do to others as I want them to do to me…I would drop the lie and be honest.

My two cents – for what it’s worth.


First, be truthful about what you’re doing.

Second, find a good, local, preferrably referred mortgage broker that deals with investors and investment loans. You do not need 20-30% equity to get a loan. It’s a good idea to have that much in any investment deal, but you don’t, so work with what you’ve got.

You can get a mortgage broker referred by visiting your nearest REIA group and networking a little.


If you do Refi to a fixed, you can get a lower interest rate by ‘buying down the rate’. You pay a point or more and the rate will be lower. You need to determine how long you will be in the duplex to see if this strategy will pay off for you.

There are also Interest Only 5/1 ARM’s that are fixed for 5 years, then become adjustable. Some investors use these when they know that they will only keep the property for 3-5 years, then do a 1031 or cash out refi.

An ‘exit strategy’ is an important factor just as when you buy…

Good luck!

Thanks everyone, I will contact someone local to the area as I agree with you, its just best to be honest.


i’ve done No-owner occupied loans at 100%.