Homeowner · Orem, UT · Member since 2014 · 25 posts · 11 votes
I'm looking for advice on what to do with a current rental property. It was purchased using 30 Year FHA loan at 3.5%. I currently rent it out and have another primary. I owe about $160k and it seems to now be worth $245k, compared to when I bought it at $179k about 5 years ago.
My goal is to get into another rental property while keeping this one. I don't think I have quite enough equity to make a HELOC worth it at just 75% LTV.
With my goal in mind, and having little capital on hand, Would you:
- Refi to get rid of PMI... wouldn't necessarily give me instant cash to put down, but would increase cash flow, no?
- Cash-Out Refi to get some cash to put down on the next property (I'm assuming I could cash out $60k or so)
- HELOC
Thank you!
Arlington, VA · Member since 2016 · 7 posts · 2 votes
9y
Mike I'm in the same situation with an FHA ARM that has adjusted to 2.375 now. Got an agent to give me comps and he thought anywhere from 260-300 and I have 175k loan on it(purchased for 225. I'm out of PMI after doing a large payment. Problem is I would have to refi into a true rental mortgage instead of the owner occupied it was originally purchased for. I'm just going to let it ride for the next year or two and reevaluate after seeing how rates move.
I'd definitely call a broker and get a quote on rates for the refi to see if it would work.
Lender · Denver, CO · Member since 2015 · 404 posts · 227 votes
9y
@Michael Rodrigues What kind of rate do you have on the FHA mortgage? Conventional financing is only going to allow you to cash out up to 75% LTV on a single-family investment property. At best you might be able to get rid of your MI but that might not even make sense considering you will now be looking at investor rates.