I have a question about refinancing. I think I understand the basics but not sure. Here is a little background first… I recently closed on a property were my current mortgage payment on is a combined $1242.09 a month. By combined I mean I took out a 80/20 then a second loan to cover the other 20%. Both the loans are interest only loans and I can’t refinance for 36 month’s with out being charged a prepayment penalty. I don’t recall off hand what the penalty is. Also because I basically put no money down, I am negative cash flow with this property of about $100 a month. I got a letter from a refinance company (like everyone else!) showing how much my monthly payment would be if I refinanced my loan at different dollar amounts. $100K loan would cost me $322.00 a month, $300K for $900.00 a month and so on. Now my question is in two parts…
Is it really has clear cut as all these fax’s, letters and phone calls I get from these companies? Will that new monthly payment be in the ballpark of m y new loan depending on the interest rate and length of loan? Or is it totally off?
Since I am negative cash flowing annually of around $1200, would it be wise to refinance and take the prepayment penalty depending on how much I will be penalized. That way I will be positive cash flowing and potentially only out slightly more money then the $1200 I know I will be?
I hope I stated this clearly enough to get some good feedback with regards to this topic. Thanks for all the help!