Mortgage Refi Dilemma

[MrsK]

Once you convert to a rental property, there are other expenses to consider. Your insurance and tax costs will change. Insurance will be less. Taxes will likely be much more.

[poky]

Once you convert to a rental property, there are other expenses to consider. Your insurance and tax costs will change. Insurance will be less. Taxes will likely be much more.

Really? Why is that? I don't think we've paid any more in taxes on the house we're renting out than we were before we were renting it out.

[MrsK]

Really? Why is that? I don't think we've paid any more in taxes on the house we're renting out than we were before we were renting it out.

In many places there is a homestead tax exemption where the value of the property is exempt from taxes up to a certain amount. The amount is usually about $60k and then the remainder of the property's value is taxed. For properties that are not homestead, then the entire property value is subject to taxes.

[poky]

In many places there is a homestead tax exemption where the value of the property is exempt from taxes up to a certain amount. The amount is usually about $60k and then the remainder of the property's value is taxed. For properties that are not homestead, then the entire property value is subject to taxes.

Ah, doesn't look like Oregon does that, which would explain why we didn't see a difference (it does protect the first $40K from forced sales and leins, but no property tax reduction, as far as I can tell).

[SoonerTexan]

Yes, we would lose homestead exemption...and Texas property taxes aren't cheap. But that is a decision for 4-5 years from now and might be a moot point if we move out of state anyway, so I'm not even going to worry about it.

[GrayMatterWife]

This is what we do. We have a 30-fixed but is pay additional every month so we are paying it off at approximately 15-fixed rate.

[alison]

We have two homes--the first we refi'd with a physician loan and when we purchased our second, we were told we could only have one house purchase with that sort of loan. Is that a problem that might come into play for you if you want to buy a second house out of training?

[SoonerTexan]

Maybe. Physician loans didn't seem to buy us anything in this situation. After talking to DH we decided to do the 30 year conventional and pay extra on it if we ever get the chance (although with student loans at a much higher interest %, it doesn't make much sense).

If we could have just removed PMI in 2 years, that would have been the best, as the cost of paying PMI for 2 more years (FHA loans must pay it for a min of 5) was exactly the same as the closing costs and the interest rate would be lower. Unfortunately, I checked and Wells Fargo wont allow it. Bastards (well, they will, but we would need to pay extra to get the balance down to 78% by then--they will not take the increased value of the home into account, which is what we are angling for)

[Vanquisher]

I would definitely loan shop. Physician loans too, and yes, I'd do the 30-year. We got a great rate on our physician refinance jumbo loan. We couldn't get better in the wild, so at the very least, look.

[SoonerTexan]

So when you all say great rate for physician loan, do you mean pretty good or it beat all other rates?

[Deebs]

Our current loan is a physician loan through a local lender. All terms were better than anything else we could find.

[Vanquisher]

Ours beat all other rates. No PMI, etc.

[gem]

Our physician loan, through Sun Trust, was better than other rates that required even more down.

[Pollyanna]

Ours beat all other rates. No PMI, etc.

Yep, this. We also found the physician loan folks so much easier to deal with. I really would explore those options before I just signed on for a standard mortgage.

[SoonerTexan]

Honestly, I'm shocked, because when I did some reading on it, it seemed like you paid in some way or another for a physician loan if you could put 20% down (higher rate or fees). But I went ahead and contacted someone from Compass Bank to see what their rates/fees are, because why not?

If not, we are going to go with the guy who did our original mortgage. He was fantastic and so incredibly responsive he must have no life. The rate compared with the "published" best rate at other banks when I shopped around.