Advice on what type of loan would best fit

[Max Hutchinson]

Hi, I am looking for some advice on which type of loan I should get for my next rental investment. I currently only have one rental which I got using an FHA(duplex) theres some equity in it I want to tap into. I have a pretty good interest rate 2.9% which is why I dont think a cash out refinance would be good considering todays rates. And with a HELOC, the research I have done says its hard and very few lenders will do a HELOC on a investment property. Also fees seem quite high. I want to tap into this equity and fund my next rental. Just looking for some advice here, as I am only on my first rental and dont have a ton of experience with loans, etc.

Thanks,

[Jason Wray]

Max,

It's very hard to accept that rates are higher but its a temporary thing and they will come back down. Just do not sit on the side lines watching other investors make deals because of the fear of losing the low rate. One thing to keep in mind is although your rate will be higher you can also eliminate the FHA MIP monthly insurance if you are 80% LTV or less. The rate might go up but removing the MIP monthly will help balance and justify the need for the cash.

You also have to look at what is the cash being used for in order to evaluate that short term rate increase and figure out you basic burn rate. If your able to land a great new deal on another investment then the long term benefit should outweigh the rate increase. You can also always refinance that rate down the road when the rates adjust down. I would still consider getting a quote for the cash out refinance.

Dont forget rates are higher but you can always opt for a rate buydown to help lower the payment and keep cash flow positive.