Advice on Cash Out Refinance

[Scott Luetgenau]

Hello BG Community!

I'm interested in a cash out mortgage refinance. Here's the current situation. We currently have a 15-year mortgage from Wells Fargo on this 3-bedroom, 2-bathroom SFR in downtown Raleigh. We owe about $100K on the mortgage and have around $70K from a HELOC and home equity loan we used to renovate the property. We think it's worth approximately $300K. We'd like to refinance to a 30-year (to aid cash flow), pay off the HELOC and HE loan ($70K), and pull cash out of the deal for a down payment on another investment property. We have tenants in the space who pay $2K monthly for rent. Our current cash flow is -$200 a month and we'd like to fix that.

The initial numbers came back from Wells Fargo at a 5.25% interest rate. Based on a $300K appraisal, the LTV would be $225K which would allow us to pull out $55K after paying off the $100K owed on the house and the HELOC/HE loan ($70K). The monthly payment would have been $1,435.

She then emailed back to say she had made a mistake and based the interest rate on owner-occupied housing.  Her new numbers were based on a 6.125% interest rate which would increase the monthly payment to $1,689.  

This small change in interest made me take pause and realize I should reach out to the collective knowledge on this forum.  Is there a better way?  Is 6.125% a standard rate for an investment refi?  If not, what should I be looking for?  Finally, does anyone suggest any other lenders for this type of deal?  Many thanks for your patience and guidance!