Considerations for Real Estate Purchases and Refinancing

by Darwin on December 15, 2015

With interest rates remaining as low as they are and the economy continuing to improve, more and more people transition into a position of being able to either refinance and existing mortgage or execute a new real estate purchase.  I’ve been pretty busy in this regard myself over the past few years.
Refinancing of existing home mortgage
A few years ago, I was able to lock in not only an incredible interest rate, appreciably lower than my old rate, but also tied to it was a no-cost refinance and a shorter term.  I went from a 30 year term down to a 25 year term and rolled the closing fees into a slightly higher interest rate (1/8 percent) while still landing a 3.25% mortgage.  The process was relatively easy with almost everything being conducted online in advance.  What’s been holding some people back over the years has been negative equity, poor credit or a basic lack of understanding of the opportunity.  Given that refinancing transactions continue, this is a positive sign that more people continue to move into the execution regime and this is putting more money back into the pockets or consumers.
Rental Real Estate Transaction
4 Years ago, I entered into a college rental transaction where a partner and I bought into 3 properties.  Frankly, it hasn’t turned out as desired, as we’ve run into many tenant and property manager issues over the years, partially due to our own distance from the properties and lack of time we were able to commit to the venture.  We are finally in position of looking to unload the properties.  We have a buyer and at the end of the day, I will have at least made a few grand on principal pay down and cash in accounts, although admittedly, we did not take any distributions during the life of the venture.  If I take anything away from this, it’s that I got to “live the dream” of being a landlord and learned that it wasn’t for me.  I simply did not have the time required to manage a property two hours away and be completely dependent upon a property manager with competing priorities and varying levels of competency.
Refinancing of Auto Loan
I hadn’t usually been a big fan of car loans, because you’re financing a depreciating asset.  But the reality is, it’s become a standard monthly cost of living for so many Americans and I could either put 30 grand in cash toward a new car or just finance it at a low interest rate.  Most recently, I financed at 2.99% on a new purchase figuring this is well below my “cost of cash” (what I think I could reasonably earn in the market over the long-term investing that sum instead).  If the rate were 8% for instance, I’d think about it differently.  Anyway, shortly after securing the loan from GMC, I learned that there’s an even lower rate being offered by my credit union with no fees.  So, for simply putting in some time and energy on the application process, I’ll drop the financing rate down to the low 2s and save ~$500 over the life of the loan.  It doesn’t sound like much, but when I look at probably an hour of work for $500 in savings, why not?
These days, there are so many efficient and established outfits in the industry dealing with either financing or titling like Southside Chicago Title Loans that all you need is the will and some time to execute a transaction and save yourself some money!
What’s your financing/refinancing story?

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