Cash out refi on duplex?

[Ashley Sanchez]

Hi everyone! This is my first post here :) thank you in advance for your patience! 

First a little background: My husband (who is a full time firefighter) and myself live in St. Petersburg, Fl. I have three small kids and am currently at home until they are in school full time. 

We own a duplex. Both sides are rented. We owe 179,000 on the mortgage, but we believe the value is close to 275,000. We also own our own home, that we JUST bought. We owe 275,000 and the value is around 300,000-310,000.

The trouble is...we are about 30,000 in the hole with unsecured debt (credit cards). These are stupid mistakes we made years ago that we cannot shake off because the interest rates are so high. We pay out close to $1000 in debt payments every month while barely moving the needle. If it weren’t for that, we would be doing so well! We only pay around 900 for our mortgage on our home thanks to the duplex income. My husband has loved being a property owner and has dreams of buying more properties but we cannot do anything because of this stupid debt weighing us down. Most of the debt is in my name (save one card with a $7500 balance that is in his name). All the properties were purchased using his income and credit only. 

I began looking at options and thought maybe we could do a cash out refi of the duplex...but then read that we could only do 70 LTV because it is 2 units. Does that sound right? That wouldn't help much. It would only be $10,000 we could squeeze out BEGORE paying closing costs 🤔. Is that right?

If so, does anyone have any advice on another way we can tap into this equity? We would love to much to start investing correctly and put this debt behind us. Of course we are trying to chip away at it. I do as much as I can from home through various small businesses, but we just cannot move the needle.

I’d love to hear what you would do in this situation! I need to hear some creative solutions. If we could free up $1000 a month that would change our lives! And it would certainly head us in the right direction. 

Thanks for entertaining a newbie! 

[Jose Matuk]

+1 on consolidating your high interest debt into the lowest interest loan you can get (cc promotional balance transfer with 0%, or another loan with less than your cc’s).
However, and please don’t take this as a lecture, the key is that you don’t accumulate more debt when those cc are free of balance. Then you can pay off faster and be debt free to start investing.
Two very helpful books you might want to read about this: 1. Richest man in Babylon which has a good section on how to get out of debt. 2. Complete money makeover by Dave Ramsay, which is like getting a spanking, but helps you tremendously.

You can do this.
Best regards!