Cashout Refinance / Sell? Suggestions Welcome

[Seth J Spears]

I own a home in the Sugarhouse neighborhood of Salt Lake City. I bought it in 2012 as my primary residence for 136,000 on a 203k FHA. I refinanced out of the FHA to a conventional 15 year in 2015. I currently only have Ten years left on the mortgage and a balance of $110,000 with a payment of $1100 a month. The home is currently valued at $350,000. I want to invest in other properties and I was thinking of doing a cashout refinance. I could take around $120,000 and move to a 30 year and only add 300 to my monthly payment. Current rent in my area would be around $1700, so if i ever had to rent it, I would be fine. So we could take out $120,000 cash through a cashout refi or sell? and get around 220,000 net debt. Any advice? Similar experience? Just caught on the fence. Open to Suggestions.

[William Hochstedler]

You should consider a HELOC. There are programs that go up to 90% CLTV for owner occupants.

Here's why:

• You don't pay debt service on money you aren't using
• Low cost of closing (and fast)
• And most importantly, you need operating cash to acquire properties. Long-term, these investment properties should support their own debt and not be reliant on your personal residence for their financing. The HELOC is designed to use the equity in your property for short term operational cash, not long-term debt. (See BRRR strategy)

Many credit unions have this product.  Make sure you are looking at one with interest only minimum payments.  Products like America First requires amortized payments which doesn't make sense for this purpose.