Cash out Refi options - Underlying mortgage is at 2.75%

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Cash out Refi options - Underlying mortgage is at 2.75%

Prashant Bagri
Member since 2018 · 8 posts · 2 votes

Hi All - I wanted to understand what options I have to do a cash out refi on my rental property?  Home is worth about $700k - and I have a 2.75% 30 year mortgage and I owe 425k on it.  I want to take some equity out of the home.  But considering the low rate on my original mortgage, and the high current rates, what options do I have to do a cash out refi and not impact the mortgage at 2.75%?

Thanks

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  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    Take out a HELOC instead of cashing out

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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    3y
    Quote from @Prashant Bagri:

    Hi All - I wanted to understand what options I have to do a cash out refi on my rental property?  Home is worth about $700k - and I have a 2.75% 30 year mortgage and I owe 425k on it.  I want to take some equity out of the home.  But considering the low rate on my original mortgage, and the high current rates, what options do I have to do a cash out refi and not impact the mortgage at 2.75%?

    Thanks


     If this is a non-owner occupied rental property, you might want to look into doing a line of credit but very few banks do them. 

    But you have to ask yourself, what's the goal? If the goal is to pay down the mortgage, keep the 2.75%. If your goal is to scale and leverage equity to buy more, keeping that interest rate won't make much sense since you are limiting your lending options. 

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  • Andrew PostellPro Member
    Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
    3y

    @Prashant Bagri yeah, your options here are very limited.  I am not sure of any lender that is writing 2nd position Lines of Credit right now....they might exist, but maybe not.  I would certainly recommend networking with other real estate investors in your market to see if anyone has any local lender recommendations. There are many groups that meet across the country. Some post here on the Bigger Pockets Marketplace. Many post on meetup.com. Even facebook will have some. Networking is always a great practice and you never know who you might meet there and what good information they have to share. Would certainly recommend visiting if one is close to you.

    Also, as mentioned above that interest rate is very strong.  You should keep that as best as you can.  I cannot tell what market you are in though - I would also guess that the home in question used to be your primary home?  So if that is a home you used to live in 2 out of the past 5 years, then you can sell and pay no capital gain taxes.  I mention this because in my market a $700k home would not rent as well as 3 $200k homes.  Some markets have different price points than others of course.  Again, lean on some other investors close to you and see what you can find.

    Hope all of that makes sense. 

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