Cash out refinance or leave as is

[Raymond Bachmann]

Hey y'all,

I've been speaking with my lender and he can help me refinance my home with another VA loan and cash out $50k, which I told him would go towards a down payment on a new property in a year and I would rent out my old home. My main concern is this: if I refinance, I can have the $50k for the down payment on the new home but the mortgage payment would increase to a point that I do not feel that it would cash flow out too well. I am debating this method: choosing not to finance and rent out my current home and use a VA/FHA loan for the new home but I would have less to put down upfront, or doing the refi. Would like some thoughts from people more experienced.

Cheers!

[James De Leon]

@Raymond Bachmann,

There are a lot of different factors and numbers that you need to take into account with this decision. When doing a cash out refi, you don't have to take all of the 50k out, you can play with the numbers so you can take some out for a down payment and still cashflow. Even if you were to take out the whole 50k, how negative is your cashflow going to be? If it's a couple hundred dollars and you're in a strong rental appreciation market then it wouldn't be a big issue. For example if you're negative $200 every month which equates to $2400 a year, but you can buy another property that cashflows $2400 a year then I would say it's worth it because you have two properties instead of one. If you're in a strong rental market then that negative $200 can turn positive in a couple years. Remember RE is a long term play so if you take minimal losses short term to get exponential return long term then that's a good bet. Feel free to reach out if you have any more questions.