Currently househacking/Wanting to do again-Is refinance worth it?

[Tyler French]

I currently have an FHA on a 4 unit 3 bed, 2 bath unit that I have lived in for about a year and a half. My plan originally was to refinance to a conventional and begin looking for a new place to live & utilize the FHA again.

Here are some of the numbers I am working through thus far: 

1. The potential rent gained from vacating & renting out my current unit is about 1000/month.

2. Bought for 243k. Estimated value is around 320k. 

3. My rate currently is 2.875%. With current rates I would expect an increase of 3-400 in monthly payment even without attempting a cash out refinance. 

From a straight numbers perspective, it seems I probably would still end up ahead. I just don't have another property yet lined up, so it stings to take that kind of hit on cash flow in the near term. 

Would love your opinions on whether to get it refinanced and push for another FHA or to keep as is and double down on a few other strategies.

Thanks!

[Lorenzo Prieto]

Tyler,

Have you considered a HELOC? A HELOC would allow you to pull equity on your primary without having to refi the full balance of the 1st mortgage into a higher rate. You could then use that money as a down payment on a 2nd home or investment home (typically need 20%). Some lenders will allow you to pull up to 90% LTV on your primary. Another benefit is you typically don't get charged interest on the money until you withdraw so that money could sit interest free until you're ready to use it. I've helped clients in the past use a HELOC to buy a second property.

There are some downsides though. Number one, HELOCS are variable interest rate lines of credit so be sure to talk to the lender about how frequently they can change and what the cap rate is. Secondly, as with any new line of credit this will increase your debt ratios and you will need to be sure that you can still qualify for 2 mortgage loans unless you go with a lender that will take into consideration your potential rental income on your primary.