Refinancing my 3-family FHA bought home

[Sergio Dorval]

Good morning everyone, 

In May of 2017 I bought my first property with an FHA loan in Newark, NJ. It's a 3-family home which was bought for $395K and now is worth approximately $550K. I am shopping around to refinance it to get rid of the PMI. But, a Mortgage broker presented me with an option of cashing out 80%(approx $80K) of the equity so I could use it to expand my portfolio. He explained that pulling out $80K+ would mean that I will have a new PMI payment and that my current mortgage payment will go up by roughly $600.00 per month. He also said that since it will take time for me to find another property, I should keep the $80K in a Money Market account that offers 2~3% return.

My reasoning is that I definitely want to grow my portfolio and although my mortgage payment will go up by $600.00, my rental income covers it. And with the $80K plus the cash I've been able to save over the past two years, I'd have the downpayment for another investment property. Hopefully in two years, I'd be able to refinance this property again and get rid of the PMI once and for all. What do you suggest I do? Should I simply refinance to a conventional loan and get rid of the PMI and wait until my equity grow a bit more? Any advice will be greatly appreciated.

Best, 

Sergio.