What should I do

[Jonathan Aguayo]

Hello new to the forum not sure if this an appropriate question here but here goes. I'm a home owner of 5 years, my house was 120k when I purchased it on a fha loan. I owe roughly 107,000 and the interest rate is 4.5% Houses in my area are selling for 190k and 180k. I live in California. I would like some advice on what to do? I have a good stable job I live well above my means I'm 35 years old no children and no wife. Should I try and sell or refi invest pull out money? I'm not scared of taking risk or moving into a smaller house. But I feel like I have an opportunity to do somthing. I could be wrong. Any advice would help and sorry for all the info thought maybe the more info the better the advice. 

[Stephanie Medellin]

@Jonathan Aguayo It sounds like you're in a great position to be able to start buying more properties if that's your goal.  You could do a cash out refinance on your primary home at a great rate (possibly 4% or less).  

If your home is worth $185,000 and you borrow 80% of that, you could take a loan of $148,000, paying off your $107,000 balance and getting approximately $40,000 cash out.  You could use that money as a down payment on another property.  A $148,000 loan at 3.875% has a principal and interest payment of $695 with no mortgage insurance, which is probably about what you're paying now if my assumptions are correct.  A loan on your primary residence will give you the most favorable rates.

If you'd like to increase the number of houses you own, I would recommend keeping the home you have instead of selling.  You already bought at a great price, and don't forget your Prop 13 tax value is based on the market value when you purchased, so that's another plus. 

If you have any other financing questions feel free to ask.