Taking the first step

[Kenzie McIlvoy]

Hi! My husband and I are very new to this. I bought our home a year and a half ago for $160,000 with the intent of doing some minor renovations and renting it out. My realtor estimates it will be worth around $190,000 today. Our loan is for $153K and we’re thinking about doing a cash out refinance on the house to lower the interest rate (currently 4.25%) and gain some capital to start investing. We’d like our next investment to be a duplex we live in and rent while also renting out our current house.

We’re feeling a little stuck. My husband is in school for this semester so we’re currently on one income. The plan is to wait until the end of the summer after we’re on double income again to do the cash out refinance and buy a duplex. We’re looking at doing a 5% conventional for the duplex, as advised by our realtor. We’d appreciate any advice we can get. We’re very new to all of this. We’ve tried to soak up all of the knowledge and resources we can but we’re still very very green and inexperienced. We want to take action but we just don’t know where to start.

[Marc Desrosiers]

@Kenzie McIlvoy

I could very well be wrong but I think for a cash out refinance banks will only do 80% of appraised value. Which puts you at about what you owe. You could look for a low interest refinance and get an open line of credit on your current property as an alternative.