Does it make sense for me to refinance?

[James Ryan]

I am closing on my first property Wednesday. Purchase price is 92k I plan on putting 10k into it. Based on comps I'm estimating the ARV to be 140k. I have a 30 year 4.35% mortgage with 20% down. Closing costs and lawyers and other fees came to about 6k. So I'm all in for about 108k and if the bank refinances at 140k that should get me 105k back. What are some reasons why a bank wouldn't do a refinance and what if the interest rate increases would it still be worth getting the cash out and use it for another deal or would I be losing more money in the long run? If it is okay to refinance at a higher interest rate, what is the threshold for too much increase of the interest rate for it to not make sense?

[Tanner Sherman]

Your question about how high the rate can go for it to still make sense to refinance is determined by how much you can rent it for if you are buying it as a rental. 

The bank will only let you refinance at 80% LTV, so if your ARV is 140k, 80% would be 112k. Subtract your original loan amount of $73,600 and the amount you would be able to refinance is $38,400 before closing costs. If your down payment and closing costs bring you to roughly 20k, and you put 10k of work into it, you would be all in for about 30k. This means on your refinance you could pull out all of your initial capital plus $8400.

I wouldn't worry too much about the rate, just if it will still cashflow after refinancing.