Refinance or Take out a HELOC on primary

[Roy Gutierrez]

Hi guys,

I have a FHA Loan on my primary home, bought in 2015, owe $112K (30 year mortgage at 3.75 rate and also pay FHA insurance for the life of the loan). I also have a HELOC against it for 55K (thru Huntington bank) and I have pulled 47K out (at I believe currently 4.04 rate). I'm estimating the house is worth about 280K, it would be nice to get out of the FHA loan and also payoff and have some money to rehab some fixer uppers that I bought.

One option is maybe to try get another HELOC (should get a better rate than the current HELOC) to payoff the mortgage and pay off the current HELOC, closing cost should be very minimal with Huntington, could end up with some extra cash for investment but stuck with a variable rate.

Another option is to refi, fixed rate, able to get out of the FHA insurance, HOPEFULLY Get a rate 3 or lower, payoff my HELOC and have some money left over for investing BUT those closing costs!

What do you guys think? What would you do?

Thank you!

[Zack Karp]

@Roy Gutierrez no brainer, refi at 80% of the value into a low fixed rate with no PMI. The costs are a small price to pay, you will make up for that in no time. Take the rest of the cash out and go buy another 1-2 properties. And also you can get another small heloc up to 90% (or higher?) after the refi is done for even more funds to invest.

Best of luck!