Need advice for refinancing out of a 5/1 ARM in NJ
Good morning! My husband and I bought a fixer upper duplex in 8/14 with a 5% down FHA 5/1ARM at 3.75% (we are living in one unit). We did a massive reno on it and should now have the 20% equity needed to refinance and get rid of the PMI. We also have about $30k on credit cards with 0% interest that expires between 12/15-2/16, so we need to pay that off. We plan to continue living in the house for a few years and then use it as a long-term rental. Here are the options that I've come up with my limited mortgage knowledge, but I'd love to hear if there is something I've missed and/or which option you think would be our best. We were planning on sticking with a traditional 30 yr. to try to take advantage of low interest rates.
1. Refinance into a traditional 30yr. Use extra cash from dropped PMI (about $200-300/m to pay down credit cards). Then roll over any extra amount into another 0% card when the rates expire. Probably, makes the least sense at this point?
2. Cash-out refi and use the cash to pay the credit cards, but then obviously have a higher mortgage (but maybe this makes sense to lock in the low interest rate?). Then do I pay taxes on the "cash-out" part?
3. Refinance into traditional 30yr and then do a home equity loan to pay off the cards (interest would be tax deductible).
*We are looking for the options which would also have the least total and out-of-pocket expenses
*Also, I believe I read that I can file to get a refund on some of the pre-paid PMI, is that true?
Our future goals include continuing to buy B&H properties at a rate of one every 3-5 years, and thus needing the cash for the 25% down payments.
Thanks for your help!