AboutBobbi Buehl Expertise Home mortgages is my expertise
Experience Experience in the area 15 years Organizations Mortgage Brokerage Education/Credentials BS in Chemical Engineering, BA in Sales and Marketing. Licensed Loan Officer for 6 years and I have worked as a Loan Officer for 15 years.
Question I am selling an apartment complex and am unsure of what I should do with my 85k in profits. I don't want to do a 1031 exchange because I hated being a landlord.
My dilemma is that I have an interest only loan on my home that has a prepayment penalty of 20,000 if paid off prior to April 2009. Also, the value of my property has gone down apx. 15% leaving me with only 40,000 in equity(20K if you include the penalty). I am concerned that interest rates will go up and my property value will continue down. I am torn between using my 85K to refinace my property locking in good rates and giving me security. Or, investing it along with my other stocks that are taking off and waiting 1-3 years to refinace my property. Also, what could or would happen to interest rates if we experience stagflation in our economy.
I am open to any ideas,
thank you
Answer Brett,
I can understand your thoughts on being a Landlord in today's market, so I sympathize with you there!
You are right, you do have a dilemma. Here's the story; the Feds lowered the interest rate, BUT the banks aren't passing on the cut to the home consumer. We may see a rate reduction, but its surely not going to last for very long, if history holds true.
I problem I see for you is this. I don't know what your interest only loan amount is, but if you wait to refinance for 3 years, you are going to take the rate hikes on your existing loan until it hits its ceiling, which is typically 5-7% and your property value is going down. My suggestion to you is this; refinance and take the loss of your prepayment and get into a fixed loan. I know its a hard hit to take, but one positive thing to come out of it is that you get to write it off on your taxes now.
The story on the street about interest rates is this; Rates are likely to hit the double digits by the end of the year, pretty much like they did in the 80's. I can actually see this happening, since I remember how things were going back then, and it looks dang close to the same today as it did back then.
I wish you luck in whatever decision you make and if you have any further questions, please feel free to ask. You can also contact me at 877-928-4891.
