To Refi, or Not To Refi, that is the question..

[Todd Fithian]

Well First I apologize; the title might be a bit misleading. My question is more of a “Should I refi and pull out cash, or Should I just Refi without pulling cash for a lower interest rate and lower monthly payment”. But I couldn’t let go of my Shnazzy Forum post title, (lame).

ANYways, I figured I'd ask the smartest people in the business opinions. I'm in a situation where I have a FHA loan, and am coming up to the end of my first 6 months of owning the property, and will have the option to refinance for a much lower interest rate and monthly payment. This is a beautiful thing, and it will also allow us to get out of the FHA loan and into a conventional. On top of that, my property's gained a considerable amount of equity in a rather short period of time which is nice. But, I have one little birdy on my shoulder that keeps telling me to pull cash out and either pay off my personal credit card/loan debt (of roughly $8,000), or perhaps enough to pay for the rest of a down payment on another property. Heres some stats on the property at the moment:

Duplex, we live in one of the units currently.

Monthly Mortgage: $1,289

Unit A pays $1,000 a month

We pay $289.

Once we move (Someday) our unit will bring in roughly $700 a month (it’s a smaller unit than A)

A no cash pull Refi will make our property pretty decent on the monthly cash flow, almost breaking us even each month, but a cash pull would help with my debt, or a down payment on another property.

I know pulling money out works for some, and not for others because of everyone’s different circumstances, but I am just curious if you guys might be seeing something I’m overlooking? Maybe I’m living in a happy fantasy that’s its “Just that easy!”, or perhaps it really is that easy? Anyways, thanks for the advice BP!