Should I Refinance?

I have a 4 unit apartment building with a FMV of $250K-$265K . I’ve just started to consider refinancing.

Current Financing:

$250K @ 5.375% FHA Loan-28yrs remaining

P+I = $1433/mo
PMI= $103/mo

Total interest left to pay: $233,000

A couple of scenarios:

Pay down balance to a 70% LTV , $75K out of pocket

$175K @ 3.65% Investor loan- 15 year term

P+I= $1264/mo
PMI= 0

Total interest of the life of the loan: $52,516

This would lower my payment by $272/mo and save over $180K in interest payments


I could do the same as above with a 30 year term.

$175K @ 4.25% Investor loan- 30 year term

P+I= $860/mo

This would lower my payment by $676/mo and I would own in 30 years instead of 15 but save $98K in interest payments.

Any advice would be appreciated. Thanks and take care.



Your $75k should generate a return every year and as a real estate investor if I am going to tie up $75k it needs to make 10% a year or more in returns!

I generally do not advocate changing my mortgages on properties where the tenants are paying my mortgage!

Your second scenerio does not work at all as it does not provide a 10% or more cash on cash return on your money!

Your first scenerio provides for a return of a little over 20% as a cash on cash return on your cash dollars! (Interest savings and new additional cash flow combined)

The only reason I would use my cash to do this is provided you do not need this cash for your investing, and you still have adiquate reserves for your family security!


Thank you GR! I was strongly leaning toward the 15 year mortgage. I just needed to know if there was an obvious reason not to proceed with it. You make very good points. I do have additional money for investing and reserves set aside for the family. I am going to look into it further. Thanks and take care.