Looking for advice on buying a new house and renting my current

[Trey R.]

Looking for some suggestions on how I can best utilize my money in this situation.

Current House: Appraised at $141,000 in October of 2014 (Purchased for $122,000 in 2010) - Currently owe approximately $98,000 on the mortgage which is a 5/1 ARM. (It was refinanced last year to the ARM because I was going to pay it off in less than five years).

We are going to be purchasing a new house in the next month or so (baby on the way).

Price: Approx $200k (3.5% for 30 years using an FHA loan with a 3.5% down payment).

I have approx $22,000 in savings.

I'm planning on refinancing the current house after the new house is purchased.  I'm going to do a 30 year loan on it so that the payment is lower in preparation of having renters.  I would like for the payment to be low so that if I go any time without a renter than I won't be paying a bunch of money.

At this point I am just going to do the 3.5% down payment and be done with it.  Is there any reason why I should spend more money now and pay myself back by doing a cash out refinance on the current home I own after I close on the new one?  Ideally I would like to get the best deal without having to spend any of my own money.

I still have a good amount of research to do before renting the house out but I wanted to try and make the best financial decisions in purchasing the new house and refinancing the old one.

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Originally posted by @Trey R.:

 Makes sense!  Definitely not wanting to deplete my savings..  I've already talked to the lender and got approved for the new place despite not having a tenant lined up so I'm good there.

Good for you.  You must have strong income and top credit.

But why do you want to keep the current home?  It has appreciated only about 3% a year in what could be argued as the period of the best rebound in real estate values.  I would imagine rents haven't grown that much either.  So,  what is your plan to make money with this property?