HELOC vs Cash out Refi

2 Replies

I have an FHA loan as owner occupant on a duplex in Coeur d Alene Idaho. The property has a mortgage of $320,000 and based on recent local comps is is probably worth about $370,000 (it's (2)2 bed 1.5 bath 2600ft). That gives me roughly 50k in equity. I am considering 1 of 2 options. Getting a 100% HELOC (they do exist). And taking the money to make some other investments. Or option 2. I am thinking of getting a cash out refi for most likely say 40k. My current interest rate is 2.85% which I've had for roughly 2 years. But another thing I have a question about is the PMI. Which costs about $200 or so a month. Is there a way I can take cash out for only a portion say 20k while at the same time eliminating my PMI. (Adding $200 cash flow from the property each month).

What are your guy's' opinions on these scenarios. My plan after I get this figured out is to get another property most likely another fha as an owner occupant. Also the HELOC option I am looking to get will be because it's my primary residence. Will there be issues if I obtain it then later move from the property? I'm not too sure how that works.

Thanks for you help and advice everyone

@Justin Heitter

You aren't quite there on equity to do a cash out refi. You need 20% equity before you can start or 80% max LTV. With that being said if you can find a HELOC up to 100% then that would be your option to get cash. By the way, which bank? 😄 It's tough to find high LTV HELOCS right now during Covid.

Regarding your mortgage insurance, if you have less than 20% equity there will be mortgage insurance on the loan. However some lenders like myself offer a one time premium for the MI vs monthly that can be refinanced into the loan amount if you are short of that 20%. The closer you get to that equity the cheaper the mortgage insurance becomes. I would say if you had a higher rate it would be worth looking at refinancing and lowering your MI, but you already have a low rate.