Cash out Refinance into a Higher Interest Rate?

[Eric DeVito]

hello all, I currently have a 30 year fixed 3.0 rate on my primary SFH residence. Paying about 1250 a month. I have close too 200k in equity. Would it be smart to do a VA cash out refinance to a 30yr 3.8 rate and pay around 1,800 a month? I would be getting 100,000k cash at closing. ( Not taking full amount of equity).

Goal: Renovate me basement and possibly purchase a mixed use property. Thoughts? HELOC better?

[Corby Goade]

I see a similar question to this on here almost daily- I don't know why people gravitate towards cash out refis without considering a HELOC. Helocs close for free- in many cases you don't even have to pay for an appraisal. You can pull WAY more equity out, you don't pay interest until you draw on it and you can do anything you want with the funds.

Sure, you might be able to get a bit lower interest rate, but by the time you pay closing costs and interest while the money is sitting in your savings account, you've likely spent more on it than the rate savings could ever be.

Obviously, I vote HELOC! Best of luck.