With rates as low as they are right now, it is hard not to jump at the opportunity to refinance your home mortgage. Of course, the question will be whether to opt for a lower monthly payment, or take a cash-out option. You could use that money to pay off old debt, do a remodel on your current home or invest in a more secure future. Alternatively, you could always refinance, take the cash and buy a second home to use as a rental property. Surely you could do something with a little extra cash coming in every month?
This is a buyer’s market. There is an endless supply of homes that are priced well under average market value. You can get a pretty nice house for very little money. There are always people looking for a decent rental house. Some want to get out of their apartment while others have been forced to get out of their high mortgage. Rental houses do not stay empty very long.
This is just a smart investment all the way around. Not only will you make money every month, the house will appreciate when the market turns back around again.
Since you are paying a good price for the house and securing an attractive rate then the payment will be quite low. You will be able to rent the home out for far more than you are paying every month. What would you do with a few hundred extra dollars every month?
If this is something you are interested in then you have a few different refinance home mortgage options. First, you can take advantage of a lower rate and the equity you have in your house by refinancing for a significantly lower monthly payment. You can also take a cash-out option, and receive that amount of equity you have and put it down on the new house. This will ensure that the payment for the rental house is low.
Of course, you do not have to put all the money down on the rental house. You can always keep some and save it for emergencies, pay off old debt or even invest it. It does not really matter what you do, you come out a winner.
Add a Third House
You do not have to stop with just one rental home. You will find this to be very rewarding, when you have a few houses. Wouldn’t it be nice to quit your job and live off your rental income? You may not be in the position to buy a third house now, but in the future you could always refinance again and repeat the process. You could refinance either your primary home again or the rental, or you could do both of them and combine the mortgages to one.
Although, since houses are cheap right now and rates are low, if you play your cards right, you may be able to buy two new homes, refinance the one you live in and still come out with about the same payment. Of course, this will give you two rentals to supplement your income with, not just one. Surely you can see the value in this?