Cash out refi or keep rate

[Samantha Elliott]

I am looking to get into investing. We currently have a house in a stable market (not extreme pricing increases currently as some markets seem to have) in am area with military bases. It is our personal house and we're in the process of moving back to the east coast (New England area) to a higher COL area. We're researching keeping this property and purchasing a new house in NE. However, we don't have a ton of cash on hand for doing so. I am looking at a cash out refi or a heloc/heloan, a 401k loan, a home equity agreement or even creative financing to do this. Investor loans I think are tricky because on the other side we're not doing an investment property, the one we currently own would be the one retained as investment. The HEI/HEA is not feasible because of the percentages most companies are wanting to take (some are over 50% of the appreciation from the date of the HEA).

The biggest question is that we'd be losing our 2.875% rate, which will be paid off in 15 yrs. A heloc/heloan won't allow us to break even on rent (even without property mgmt fees) and is up at 8.8-10%. We will be moving cross country and not involved in the management much so I don't think we can claim those losses. A cash out refi would allow rent/fees to be covered by tenant but it changes it form a 20 yr loan to a 30 yr loan and also increases the rate up to like almost 8%. Even looking at the balanced rate (which I feel like is hard because the terms are different) along with the potential to have the monthly payment/fees covered, it feels like a cash out is a better option if we did want to keep this.

Part of the current struggle is that the market was hit harder from the rate increase so sales are almost at a standstill and even with trying to sell the house, the rental market is doing substantially better because most military cannot afford to purchase in this area as the payments are over 6k/mo for buying vs 3-4k/mo for renting.

Any advice is most appreciated!