Should i refinance my house?

Hailey
I purchased a townhouse a couple years ago when I was single. With my growing family, we moved out and rented a larger place from a friend. I'm now renting out my old place to another friend. This friend wants to buy the house from me within the next year. So would it make sense to refinance? I have zero expertise in finance, so I might as well educate myself.For more specifics, my current mortgage is a 30 year fixed rate at 5.7 apr. The house was appraised last year at 90k and I still owe about 85 of that. I intend to sell it for whatever I can get...more than 85k obviously but not necessarily the 90k. Anyway, I hope this is enough to get some input. Thanks for any help!

Alba
If you sell it to your friend in a year there will be closing costs that you pay and costs that your friend pays (your friend might need to negotiate it so that you pay his costs for him (or her)).When you refinance right now you will have costs. They can either be paid by you in cash or rolled into the loan. A rental property costs more to refinance than a homeowner occupied home costs. All that refinance expense will be wasted if you are selling it in a year.

Dania
You won't be able to refinance it. Nor would you get much of a rate reduction, if any at all, even if you could refinance it. For a non-owner occupied property, lenders will only go 75% loan-to-value. So, you could only get a loan for $67.5K.Also, non-owner occupied mortgages are generally a bit higher rates than owner-occupied mortgages. And, the amount of loan fees you would have to pay to buy down the interest rate doesn't usually break even for about 5 to 7 years.5.7% is a good rate. Just keep paying it for the next year.

Shantay
Considering that there are costs associated with refinancing, it doesn't really make sense for you to do that if you are just going to sell it.