Cash-Out Refinance or HELOC

[Joe Rinderknecht]

Good afternoon BP,

My question today is on whether or not I should do a cash-out refinance or do a home equity line of credit on my duplex?

Here are the details on my house.

- Bought with an FHA loan in July of '16

- Paid market value of $166,000

- Remaining loan is $160,000

- Raised rents from $1,150 to $1,450

- New appraisal of $210,000 from improvements and comps in my area.

I am wondering where my owner occupied loan will be up in July, I have the ability to refinance into a conventional loan and be able to get another FHA. Or if I should keep my FHA status and do a home equity line of credit, where I can then take money out when I'm ready and buy a seller-financed deal or even get a conventional loan?

Let me know your thoughts and if you have any other questions to help you in your advice. Thanks in advance.

[Jon Huber]

@Joe Rinderknecht If your remaining balance is 160k, and the appraisal came in at 210k, your LTV is over 76%. Assuming you would only get a ref of 80% LTV, I'm not sure if a cashout refi of 4% would meet your needs. I've discussed HELOC's with US Bank, and they would go up to 90% for a primary residence. I don't know your financial situation or credit score... so I am going off of assumptions here.

Given that math... the HELOC at 90% LTV against 210k would give you 189k... minus the 160k first position mortgage... you would get 29k. That would be better than the 4% refi giving you $8.4k.