Any Advice on the following - VA vs Conventional?

[Ricardo T.]

I have a multifamily I utilized my VA loan on which I refinanced at a 2.25% during Covid. I am looking at freeing up my VA entailment and refinancing into a 7/1 ARM at 5.0% . I would like to use my VA loan to purchase a Condo with no money down. Would you keep the Va loan on the investment property and use a conventional loan on the condo. Or would you refinance the VA loan, flip to the ARM and use the VA on the condo. The property is cash flowing around $1250 give or take after all expenses.

Current Mortgage Payment (Including taxes insurance): $2,200

New Mortgage Payment: $2,800 

Difference in monthly payment: $600

New Cashflow if refinanced -  $650

Cash needed if I had to use conventional on new Condo: 30-45k (5%down in the greater Boston Area)

[Chris Mason]

Quote from @Ricardo T.:

I have a multifamily I utilized my VA loan on which I refinanced at a 2.25% during Covid. I am looking at freeing up my VA entailment and refinancing into a 7/1 ARM at 5.0% . I would like to use my VA loan to purchase a Condo with no money down. Would you keep the Va loan on the investment property and use a conventional loan on the condo. Or would you refinance the VA loan, flip to the ARM and use the VA on the condo. The property is cash flowing around $1250 give or take after all expenses.

Current Mortgage Payment (Including taxes insurance): $2,200

New Mortgage Payment: $2,800 

Difference in monthly payment: $600

New Cashflow if refinanced -  $650

Cash needed if I had to use conventional on new Condo: 30-45k (5%down in the greater Boston Area)

I'd suggest a HELOC on the current property.

- Keep your sexy VA rate.

- Now that you have the HELOC for a down payment, you don't need to use a VA loan on the next one.

- "But but but HELOCs are adjustable rate mortgages!" - yes, and rates have followed inflation up. It broadly appears we've turned the corner on inflation, and (there will be lag time) rates will be following inflation right back down. Short term and long term I have no rate crystal ball, but medium term (say 12-36 months, inside the window of where it would matter for a 7/6 or 10/6 ARM) adjustable rates will be adjusting downwards (& my crystal ball is just repeating what economists are saying about inflation, the only addition being that "rates follow inflation").

- Long term, no interest rate crystal balls, and also no point to plan more than a few years out IMO, "the first casualty of war is the plan." The endless possibilities at this point include that a cash out refi to consolidate the HELOC and current 1st mortgage into a new fixed rate mortgage may be a lot less painful than cash out refinancing that same amount of debt today.