BRRRR or keep existing loan? Advice needed.
I purchased a 3 unit back in September of 2020. After some forced appreciation (making a legal a 4th unit) and some general market appreciation, I now have a decent amount of equity sitting in the property and would like to know what I should do with it. The main thing giving me hesitation is the insanely low interest rate that I received on it.
Here's some numbers to help:
Current mortgage ~550k w/ FHA @ 2.25% interest (3.5% down)
Current market rents for all 4 units (we live in one) 8.5k/month
Current market value ~900k
Current PITI(+PMI): 4050/month
If I do a cash-out refi, I can keep 20% of our equity and pull out 80%. This would leave me with roughly 170k after paying off the existing mortgage. However, with our current rates we'd be looking at ~5.25% and our monthly PITI payments would increase by roughly 1.3k to 5300/month.
My question is, would you recommend keeping our low interest rate (plus PMI), or would you recommend doing a cash out refinance and pulling out some significant equity? Another benefit of pulling out that equity I see is the potential for re-using the FHA for another property. Any thoughts/feedback would be appreciated!