Garner, NC · Member since 2021 · 45 posts · 33 votes
So I called the bank to do a cash out refi. For $150,000 mortgage on my primary. My payments will be $2000 a month with a 6.75 interest rate. I have all this equity & still can’t afford to have my money work for me in other investments. how do you manage this? In this type of market. I’m so frustrated. I know most of you are like it’s only $2000, but to me it’s a lot & can’t afford those types of payments.
Real Estate Agent · Denver CO · Member since 2019 · 209 posts · 332 votes
3y
@Nick Camizzi - Ahh I see. That's a screaming interest rate. I have the same problem too on 2 properties.
In that case I'd go with the HELOC and then move. Yes, the rate would be 11% but the blended rate would be much lower and there's no closing costs and you keep the 2.99%.
Is moving in the future a possibility? That would be the best option IMO. Now your primary becomes a cash flowing rental with a 2.99% interest rate, fast equity build up bc of the low rate and a $150K HELOC. If the cash flow is high enough it may cover the interest on the HELOC up to a certain amount or at the full $150K.
Your next house you'll have to come out of pocket on but that's OK. W2 + Door dash, Uber, Lyft, etc... and stack cash while you're living with a 2.99% interest rate and low monthly payment and get to that 5% to 10% needed for the downpayment for house #2. For house number 3, you can use the HELOC funds from the 2.99% interest rate house for some or all of the downpayment. Plus you'll have 1 year of rental income and experience which will help when talking to lenders.
Right now maybe the best use of the 2.99% interest rate and $150K of equity is your low living costs which gives you a big shovel you can use to stack cash.
@Nick Camizzi - Ahh I see. That's a screaming interest rate. I have the same problem too on 2 properties.
In that case I'd go with the HELOC and then move. Yes, the rate would be 11% but the blended rate would be much lower and there's no closing costs and you keep the 2.99%.
Is moving in the future a possibility? That would be the best option IMO. Now your primary becomes a cash flowing rental with a 2.99% interest rate, fast equity build up bc of the low rate and a $150K HELOC. If the cash flow is high enough it may cover the interest on the HELOC up to a certain amount or at the full $150K.
Your next house you'll have to come out of pocket on but that's OK. W2 + Door dash, Uber, Lyft, etc... and stack cash while you're living with a 2.99% interest rate and low monthly payment and get to that 5% to 10% needed for the downpayment for house #2. For house number 3, you can use the HELOC funds from the 2.99% interest rate house for some or all of the downpayment. Plus you'll have 1 year of rental income and experience which will help when talking to lenders.
Right now maybe the best use of the 2.99% interest rate and $150K of equity is your low living costs which gives you a big shovel you can use to stack cash.
Thank you for your reply I really appreciate that. I will take it in consideration.
I think the confusion is what is the total loan amount? You say you are 'pulling out $150k - $200k.' If you have $100k existing loan, the post above mine calc ~$308k is spot on. The initial responses to OP would be incorrect since they are working off the incorrect loan amount.