Good Time to REFI Cash Out?

Question

I just spoke with my mortgage broker, as I am considering a cash-out REFI on a Hollywood duplex. While it is tempting to sell high (or cash out REFI) in this market, the new interest rate (high 5's) that would accompany a cash-out REFI is a bit unsettling. My broker reminded me that we've been spoiled with interest rates in the last 8 years. I purchased this property with a 3.75 interest rate 5 years ago. Historically, interest rates have been as high as 18%. So, perhaps the hike from 3.75 to 5.75 is relatively small, if I could capitalize on a 70K Cash out on a property I bought 5 years ago, and re-invest the capital in another asset where the numbers work.

What are your thoughts on cashing out right now (capitalizing on high property prices) vs the high interest rate that comes along with it?

What are your thoughts on cashing out right now (capitalizing on high property prices) vs the high interest rate that comes along with it?

John Cleveland · Answer

Hi Jonathan,

The real question is if your thinking about a cash out refi  is the"why"?   Here is what i mean.  Are you considering to do the cash out refi to pay off debt, buy additional property, or just have some fun.   If you absolutely must do a cash out then i would take advantage of the low rates and flip it back into obtaining more investments because you never know if rates will ever be this low again.

Cheers!

Cristian Aviles-Morales · Answer

Yeah I'd cash out. Interest rate hikes are only going to continue.

Alexander Felice · Answer

5.75% is low, enjoy it while you can