Cash out refi terms advice

[Michael Macaluso]

Hey everyone!

I’m in the process of completing my first cash out refinance and I would just like some advice. 

I have two options at my disposal. 
I owe 120k and my property was appraised for 270k. 

My first option is a 70% cash out at a 3.9 rate. With taxes and insurance my payment is 1540. 
My second options is a 75% cash out with a 4.25 rate. With taxes and insurance my payment is 1650. 

I’m sure, for seasoned investors, this isn’t a huge difference. But since this is my first cash out, I’m trying to err on the side of caution. 

Would you take out more cash, have the property cash flow less, and pay a slightly higher rate? Or, take out less cash, have the property cash flow a little more, and pay a slightly lower rate?

Thank you for any reply!

[Jake Wiley]

Assuming you are investing for cash flow and long-term wealth-building, the goal would be to utilize the cash-out to leverage another investment that increases your cash flow.   If you follow and stay focused on that rule, you have the highest likelihood of success.   

Not knowing what you are going to do with the cash you take out, it's hard to give you a prescriptive answer, so the analysis you should do is when reinvested with the additional amount, does it improve your cash flow collectively or not.    

The only other consideration would be locking in a lower interest rate.   If you believe that interest rates will continue to rise, then 4.25% is a good rate for the extra cash available, again if you are going to reinvest.