Best option to pull out equity from home?

[Ceasar Abreu]

Hey Everyone,

I bought my first 3 Family Home (Multi Family) back in December of 2021 in RI. Took me just about 2 years to finish renovating the 3rd and 2nd floor. I did all the work myself pretty much which is why it took so long to be completed, but I saved a lot of money and learned a whole lot in the process. I'm looking to get into my next home very soon and was wondering what would be the best way to do so? 

Back in 2021 refinancing was my end goal but now that rates have doubled since then, does it make since to refinance to pull money out? I'm locked in at 3%, but let's say I refinance at a higher rate where my mortgage only goes up a couple hundred dollars, but I'm still able to cash flow, does it make it worth it? My mortgage is $2200. I currently have tenants on the 1st floor, beginning April 1st I will have tenants on the second. Those 2 apartments will bring in $3100 a month and cash flow $900 when the mortgage is paid. Once i move out and rent the 3rd floor, cash flow should jump to $2200 minimum. Cash flow is only taking into account once the mortgage is paid, not anything else currently (Sewer, water, maintenance, etc.). I also thought about a HELOC but i know if i use that as a down payment, that's another monthly payment I have on top of my first mortgage. Any help in the right direction would be appreciated! Thanks!

[Greg Scott]

Why are you concerned about having both a HELOC and mortgage payment?

You should do the math. What would your mortgage payment be if you got a 75% LTV on a new mortgage? What would your payments be if you instead took got a HELOC to get to 75% leverage? Interest rates on HELOCs are typically more than a mortgage, but if you think about the blended interest rate, you are likely paying less for HELOC + old mortgage than you would for a new mortgage.