Would you cash-out refi or just refi and wait?

2 Replies

Here's my situation. I am in the process of refinancing my home with the main purpose of dropping PMI and getting a better interest rate. It is a 30 year fixed locked at 3.99%. The appraisal came in slightly higher than expected and I have just over $100k in equity. My initial plan was to take 0-$10,000 cash out just for home renovations, and hold my equity and eventually take out a HELOC to use for my future real estate investments.

I'm starting to second guess my strategy and am wondering if I should be taking out more for a down payment(or potentially a full purchase) on my first investment property.  They will fund up to 95% of the appraised value.  I was thinking of possibly taking out ~$50k which would make my monthly payments almost identical to what they are now.  I'm worried about this option because, while I have been doing a ton of research on my area, I haven't yet been actively pursuing any deals.  I'd hate to be paying interest on money that is just sitting in an account but it still may be one of my better options.

I realize that there is probably no definitive answer, but any input is welcome, especially if there are any concerns or different options that I have overlooked.

keep in mind, the 95% is when you don't take cash out. Most of the time it's reduced to 85% when you take cash out. Then you're back in the same boat paying mortgage insurance again. You're better off adding a heloc to it to lock in the savings after you refinance. Then you have the option to cash out when you see the opportunity with a heloc.

I would suggest get the 95% funding then take the heloc when you have found a property and ready to put down for it. 

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