Is Refinancing the Best Option

[Guido Bertoli]

I've read a lot about refinancing and how it is a good thing. I have a few thoughts that for me feel like refinancing may not be the best thing.

My primary residence I owe about $309,000 and it is currently worth about $410,000. I've talked to my lender about refinancing and they said they could do an 85% LTV. If we calculate that that would be a loan of $348,500. So that leaves me with about $40,000 cash. Seems good but I have a few questions that make me think otherwise.

1. If I refinance I'm assuming there will be closing costs. How much is it approximately? Are there any points they charge? Or what would I end up keeping at the end?

2. If I refinance because I'm getting a new loan that is higher than what I had before I would assume my payments each month would be the same. Is this true? Why would I want to do this because this is my primary residence?

Would I do this just to get the cash to make a deal, then use that cash flow to help cover my increased loan on my primary residence? Does this all make sense?

I do understand that having $40,000 of cash is great, but this is my primary residence and I have yet to purchase any rentals / flips and want to make sure this is the right decision.

Completely irrelevant to above but it got me wondering:

Assuming I flip a house in the future...

Example:

I buy a crappy house for $190,000 and it needs $20,000 of repairs and the ARV is $300,000. (70% Rule)

If I borrow from a private lender, hard money, etc with a high interest rate (I don't know 15%) and I have it cash flow $100 per month. When I refinance this out at $300,000 wouldn't my payments be higher and would it still cash flow? How can I know for sure? Is there a certain formula or am I reading too much into this?

Thanks Everyone!