Funny how quickly the mood pivots on Wall Street. In the middle of February, the Dow Jones Industrial Average hit a record high of 29,568. As I write this 16 days later, the Coronavirus has infected the global economy sending traders scurrying for cover in safe havens such as cash, government bonds, and gold.
Now is a great time to refinance your primary residence and any income properties that have less than a 75% loan to value with healthy cash flow to cover payments after all expenses.
Don’t Waste a Perfectly Good Crisis.
I just met with my banker and we locked in 3.375% on a 30-year fixed on my primary duplex. Originally, the rate was 4.75%.
Next, I locked in 2.875% on my 30-year VA loan. This was a property I purchased for little down and I was able to drop the rate from 4%. Never in my 20+ career buying income properties have I seen a 30-year fixed this low!
Now, I’m working on eight other conventional loans. I’ve been waiting more than a decade for this perfect pitch and it looks like I’m going to hit the loans out of the ballpark.
As an added bonus, the real estate market is hot and getting the properties to appraise is a breeze. I was pleasantly surprised when another duplex I refinanced appraised for $25,000 higher than I projected.
If all goes according to plan, I will pick up another $2,200 per month in cash flow as a result of locking in 30 years of fixed debt at 3.5% or less. While my principal pay down will drop by $730 per month, I can easily make up the difference. All I need to do is deploy the savings into a new property or simply reinvest the money into the stock market for a higher return over the long term.
Whatever you do, don’t get cute and wait for rates to drop lower. This is an amazing opportunity and rates could easily jump fast once the global panic ends.
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