Cash-Out Refinance or HELOC or Neither to finance a rental?

[Robin Jin]

Hi everyone,

I've just recently started looking into real estate investment, and I have a question about potentially refinancing my house. I got my single-family home that I currently live in in Sept of last year for $137k and got a 10-year fixed rate conventional loan with 4.25% interest and 20% down, and they covered part of the closing cost. I was planning to pay off the house in 3 years (this was before I knew anything about real estate investing), so I was paying about $1,900 towards the principal in addition to my $1,500 monthly mortgage payment. I currently have about $60k in equity in the house, and I'm wondering if I should cash-out refinance it to a 30-year mortgage so I can use that money to buy an investment rental property. Or should I just stop paying the additional payment towards the principal and simply start saving for a down payment for another property? I'm not sure if HELOC would make sense in this case, either. I live in Texas if that makes a difference.

Any input will be greatly appreciated!