Refinancing after building an ADU
Hey all, I've got a SFH in Inglewood CA that I bought in 2019 because it had a massive old garage structure that could be converted to an ADU. I'm in the middle of that conversion now. I bought the property for $655k and putting in about $250k for the ADU (it's a 2-bed, 2-bath and needed new foundation and roof). I have a mortgage of about $490k, at 3.625%. Property should be worth about $1.3m once ADU is done and I would really like to be able to get my $250k ADU investment back out, which would require about 55-60% LTV. I have a few questions -
(1) could I get a 2nd lien so I can preserve the rate on my current mortgage?
and (2) should I even do it? If I can't just do a 2nd lien and instead refinance the whole thing at 6 - 6.5%, the marginal cost of pulling out that $250k is crazy because I'd be paying an extra 3% on the existing $490k. I did rough math, I'd be effectively paying 12% on that $250k. Ugh! Just doesn't pencil out unless I can preserve my current rate on the principal that would stay in place.