Hi BP community,
I've just purchased my first deal and I'm looking to pull some cash out- I'm hoping to find tips on whether to pursue a HELOC or refi, and how to go about it. Here's the details:
Bought a SF home in Houston (Heights area) for $270K w/ 3% down loan through the Freddie Mac Home Possible Program.
It originally appraised at $280K (this was really low IMO because the comps were all smaller but sold for more than mine). Ive put about $25K in rehab (new roof, re-piped the house, total kitchen remodel).
I know this isn't perfect, but the Zillow estimate is at $368K. It should be noted that Zillow has the property incorrectly listed as a 4/1, when it is actually a 5/3 (I live in 1 room and rent out the other 4, woo-hoo!). Zillow also doesn't take into account my rehab work. The remodeled houses on my street have sold between $375K-$465K (and they are all smaller sqft).
All that to say I think I should have plenty equity in the property to pull out. I'd like to finish with 20% equity in the property (to eliminate my PMI) and use the cash to pay off my rehab expenses.
Should I go refi or heloc? I've poked around the forums, and it seems like I should go refi to get rid of PMI, but HELOC is cheaper to close...
Are there any rules against refinancing a new mortgage (I've only made 1 pmt)? And how should I go about it? I'm thinking about starting by calling my current lender to see if they can do it- is that taboo?
Sorry for the lengthy post- I appreciate any help!
