Posted by Tim Fierro (Tacoma, WA) on July 11, 2002 at 13:07:56:
I would look at refinancing that 8-/34% and the 2nd mortgage to something along the lines of 7 or under after you have been there a year. At that time, maybe your credit and income will allow you to refinance at a lower interest rate which would then lower your overall payments also. Double check that prepayment penalty to see if it there is a time limit on it though.
Getting $5k is a wise choice and doable, but to get an extra $200 per month, you need to determine if the rental rates will garner $1500 a month. Your $1300 mortgages and the $200 profit you seek.
When deciding on the purchase price to your T/B’er, come up with an approximate guess of what the house would be worth (or what you want) for the term of the contract.
By refinancing above as I mentioned, this would also save you a couple of hundred on monthly payments. So if rentals are only bringing in $1300 a month, by refinancing down to an $1100 a month payment, you would still get that $200 a month spread.
When you L/O your house, you still retain ownership and get all tax considerations/benefits from it.