Need to make a strategic next move...

[Pete Fiannaca]

Hey Folks!

Last week was HUGE for me as a new investor, having closed on my first cash out refi of a small SFR I bought about 9 months ago. Numbers were great as I ended up out of pocket about $15k for a down payment (20%) and another $15k in rehab costs. We refi'ed at 80% and I ended up depositing my check of $30k in the bank just the other day. So altogether, I'm out $0 and now have 20% equity in a property that nearly doubled in appraised value and is cash-flow positive to the tune of +$450/month.

With that out of the way... here's where I really need to tap into the knowledge in this community.

I'm interested in refinancing my primary residence which was purchased 2 years ago via a 3.5% down FHA loan. The goal is to free up FHA so that I can use it again to move out of my primary (rent it) and move into an owner occupied situation in a 3 or 4 unit. With renovations that have been done to the house, I'm confident that I'm sitting on the border of 20% equity. I have a couple options and I'm not sure which one would put me in the best option moving forward...

OPTION #1: A local lender in town currently offers a 95% cash out option on primary residences with NO PMI. The catch there is that they ad .75% to the rate, so as of today, we'd be looking at a straight 5%. As long as the appraisal goes peachy, We stand to cash out around $20k minus closing costs. Payment stays the same since we drop PMI, but also hike up the rate.

OPTION #2: That same lender will refi conventional 80% LTV. Appraisal comes back peachy and it's a break even. I drop my PMI, payment goes down which helps me cashflow more when I turn my current primary into a rental. However, I forgo the $20k lump sum which might be helpful down the road.

OPTION #2B: Quick audible on option #2 as I could do 80%LTV and drop to a 15 year mortgage only increasing my current payment $50 or so a month. Again, no lump sum cash, and not increasing cashflow, but cutting the term in half.

OPTION #3: This was the most creative option (bank suggested it). Do the 80%LTV so that I get the best rate possible and schedule a double closing which would include a HELOC for the other 15% (95% total). In this situation, I'd have the best rate, the most equity, AND the flexibility of about $20k in a HELOC locked in at 4.2% for 10 years. Again, it's not cash, but it's firepower if I need it.

HELP! So many implications here. Again, trying to put myself in a situation where I can scoop up the deal of a lifetime as soon as I find it!!! 

Thanks

Pete