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This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate. This calculator factors in PMI (Private Mortgage Insurance) for loans where less than 20% is put as a down payment. Also taken into consideration are the town property taxes, and their effect on the total monthly mortgage payment.
You own a rental property for years, and never see the "big
pay-off." Is it time to cash in on your investment, now that
you've paid down the mortgage, and values are up? Maybe not.
The Problem With Selling
Selling means you'll have to pay a large capital gains tax. This
can be avoided if you reinvest through a 1031 exchange, but then
the point is that you want your money, right? Also, a good
rental gets more income as rents go up. Do you want to lose this
inflation-indexed retirement plan? What's the alternative?
Refinancing Rental Property
Have you considered that if you refinance, you can get much of
your gain out of the property, without paying a penny in taxes?
Borrowing money is not a taxable event. You can take it and
spend it however you want, and still keep your rentals.
Let's look at an example. Suppose you have owned a small
apartment building for years. You bought it for $240,000, with a
downpayment of $40,000, and mortgage payments of $1650 monthly
on the balance. Now it is worth $400,000, you only owe $120,000,
and your cash flow is around $800/month. How do you get at that
equity?
A bank will probably loan you 70% of the value, or $280,000.
After paying off the first mortgage, you are left with $160,000.
With todays lower interest rates, your payment on the new
mortgage will be about the same. At most you might lose
$50/month in cash flow.
An even better scenario: Use $40,000 for high-return upgrades to
the property, such as carports or laundry rooms, and then raise
the rents. You could have $120,000 left over to spend any way
you want, AND have higher cash flow. Does that sound better than
selling your retirement plan? Don't sell. Refinance that rental
property!
About the author:
Steve Gillman has invested real estate for years. To learn
more, and to see a photo of a beautiful house he and his wife
bought for $17,500, visit http://www.HousesU
nderFiftyThousand.com