CASH OUT REFINANCE

[Manny Martinez]

So long story short I purchased a 2 family in nyc in 2015 I owe 399 on it mortage is 2800 p/m but I bought it with fha loan so I am paying PMI. My realtor did a comp search and says the home is worth about 730 with the comps in the area, I spoke to a bank in regards to Cash out refinance and I can pull out 80k (which I will use to buy another property) my mortage will be 3k per month...my only issue is that my interest rate is 3.75 on my current mortage and will be 4.6 on the refinance but will be getting rid of the fha loan. Sound like a good idea or would you guys recommend doing a home equity loan and leaving the rate and payments

[Ryan R.]

@Manny Martinez FHA monthly mortgage insurance is typically 0.85% of the loan amount, so you are effectively already paying the rate you were quoted, $200 per month on an $80,000 loan amount would be about the equivalent of a 3% interest only loan, now factor in the difficulty in finding a 2nd mortgage in todays rate environment that low and assuming the refi rate you are talking about is a fixed rate, your $200 extra per month is paying down the balance of the $80k further reducing the effective rate you are paying on the $80k, all while paying about the same effective rate on your existing balance when you combine your rate and MMI... seems like it is a good move to me or at least better than finding a 2nd mortgage.