Cash out refi w/ higher interest rate but no PMI or HELOC

[Todd Fithian]

Hey BP, Ive got a duplex that has an interest rate of 3.75% that I do not live in and has grown in its equity over the past few years. It was purchased with an FHA loan and cash flows about $280 a month now that we no longer live there and have both units rented out. It still has PMI on it but I want to use the equity in the property to buy another property. The property is worth about $280k and I owe $178k. So my question for you is would you: A) Cash out refinance the property, shed the PMI, but have a higher interest rate -Or- B) Pull a HELOC out on the property and use that cash to fund another property, leaving the interest rate where it is on the mortgage, but also leaving the PMI on the property? I'm not sure how much I'd save per month on the PMI if I refi'd out, or if the higher interest rate would pretty much break the payment even without the PMI. Thanks so much for any help you great people can give!

[David Jackson]

Hey Todd,
I’m in a similar situation. It seems that banks won’t do a HELOC on an investment home (primary only). The closing takes place in your living room.
If there is a (legal) way around this, I’d also love to know.
Refi rate was too high. My PMI is 1%. Losing pmi didn’t cover the difference in new rate. I’m still considering in order to have opportunity cash.
Good luck.