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Updated over 7 years ago,
Should I refinance/cash-out?
Back in 2013 I bought a 1 bedroom condo downtown for $150k on a 5/1 ARM with 2.875%. I was single and living in it, and the idea was to pay it off very quickly then rent it out. I paid the loan down to $85k so far.
However, I got married, kids, plans changed. So now I am living in a home and have been renting the condo out.
So I have a lot of money tied up in this property and would like to have that money to purchase a second rental. However, I am having a problem doing the math in my head and figuring out the best option to get a second rental.
The 5/1 ARM will be up next year so I am sure my rate will increase. I owe $85k and the condo is worth $175k+. Am I right in thinking I should just cash-out refinance it and use the money to buy another rental or is this a bad idea?