We chose 10/1 ARM just to have enough time to make our decision. We will try to rent the house for a few years and then try to sell. Nobody knows if the market will continue falling or will start appreciating again and how many years will this take. So much in life depends on luck!!!!
Have you thought of a 7 Year fixed Arm? There may be a pre-payment penalty for the 1st few years...
All the best, John RE/MAX 215-757-2889
As for utilities you should always have the tenant set up the utilities in their name and pay them.
Again looking at your situation broadly you should make out alright. If you are trying to zero in on what your house will be worth in 5/7/10 years you are going to frustrate yourself. Focus on the beauty of the low rates and the equity you can build with it. Focus on the financila vehicle that it is especially becasue you have a tenant paying your principle for you.
Thank you for advice.
You are correct in saying prices vary in 19119 due to the locations ie. Mt Airy vs Germantown. You should see stable growth there in the years to come. In addition prices in some parts of 19119 have help up fairly well. It is also fantastic you put what looks like 20% down when purchasing the house. In 5 years your note should be around $162,000 if you choose a 5/1 refi (using 2.99% ). Even if you sell it for what you purchased it for you'll come out with some gain. And your renters are paying the mortgage and principle for you. Or you think longer term and keep paying the principle off with a renter.
With a principle and interest in the $750-775 range after refinancing + taxes and water you should be able to charge $1200-$1500 in rent.
I would manage your expectations with the amount of profit you will make but based on averages and loan amortization if you refinanced right now with a 5/1 you should have about 13-15% of your original principle paid off. This is not including fees to refinance. Then of course you have closing costs when you resell. However, I did not calculate appreciation and depending on the neighborhood and house you are in you should see some.
If you give me some more concrete facts about house price and neighborhood, new construction vs. rehab. I can play out some scenarios for you. How much do you believe your house has dropped in value? Clearly taking advantage of the refinancing options right now can benefit you other then that you seem to be asking how long do you consider waiting out to sell.
The market is so bad and unpredictable right now- prediction is that it will stay low for another 2 years. I would like to make profit on the house sale in order to have enough for a downpayment in the future (I am ok to wait for 5-10 years to accumulate enough money) How many years do you predict to wait to get good equity in the house and max profit from sale?
Right now 15 yr mortgages are very close to the 5/1 arm interest rates and are a more secure refinance amount. I would take advantage of it. Take your situation with a 100k mortgage example: after 2.5 years (30 mos) at 5.125 % you have paid about $3750 in principle, leaving you with a $96, 250 mortgage balance. Refinancing for 15 years at 3.25% after 5 years you will have $27,000 in principle leaving you with about a $69,000 mortgage balance.
Depending where your house is in Philadelphia and if your mortgage balance is between $70,000 and $350,000
there is a good possibility the rent collected could cover the payment. Don't hesitate to reach out and discuss.
2200 Walnut St.
Phila, PA 19103
Have you worked with a Mortgage Calculator to determine if it is worth doing a Re-Fi; will it cost you more than you save, 5.125 is not a bad rate.
Also, does your present Loan allow you to Rent it out; that could have serious consequences.
As far as appreciation goes, we are starting to see spotty and sporatic increases, as would be expected: The whole Market will not pick-up and increase all at once. There will also be some dropping. Again, it comes down to Location, Location, Location!
Good luck and may God bless