Cash out refinance to pay off credit cards

[Aaron Frances]

Hi Everyone,

I converted my 2-flat apartment building into a legal 3-flat using a cashout.

Appraised at $425k, new mortgage at $2330 at 4.35% currently owe $305K now.

Property may conservatively appraise at $525k according to realtor I may have gained $100K with adding a 3rd apartment to my property. Comps seem to be selling higher in my area.

Current FHA quotes a 2nd cashout loan at 3.375% with $11k in closing fees with 7k of it being FHA fee. Mortgage would go up from $2330 PITI to $2839 PITI at$420k 30 year loan.

Conventional came back at 5.9% which would make my mortgage $3100-3200 a month PITI.

I under budgeted for the rehab and am now left with $100k in loans and credit debt at an average rate of 13.35%. We live in one of the units so we are saving $1700 a month not paying rent elsewhere and are still receiving $500 dollars in cashflow after receiving rent from the other two tenants. It kills me to pay out $2350 a month in credit cards with interest when i'm sitting on a possible equity of $200k+. We plan on taking out $99K cash out to pay $65K in credit cards so my wife's DTI can look good when we go for our 2nd property. The $34k in installment loans would remain under me as I'm the mortgage holder of this house at a avg rate of 9%. We'll use the remaining $34k from cash out as down payment for another 3-4 unit property possibly using FHA. I'm just curious if we are approaching this the right way. I'm inheriting a bigger mortgage that the tenants will cover when I move out just so I can have piece of mind that we don't have our money being wasted in finance fees. I feel like the finance fee's are canceling our current cashflow and the payoff calculator we are using for the Credit debt reads 7 years if we keep using our avalanche paydown method to the tune of 43k in interest paid over 7 years. I just want to be free and clear so when we move to the next property we can concentrate on the cashflow business side vs the juggling of the credit card payments. Thanks in advance everyone.