To refinance or not to refinance right now?
Korey RalstonPro Member
Investor · St. Petersburg, FL · Member since 2026 · 83 posts · 49 votesTo refinance or not to refinance right now?
Most Popular Reply
Quote from @Korey Ralston:
Good afternoon everyone,
I’m weighing the pros and cons of refinancing one of my properties in today’s market and would really appreciate some input.
I purchased one of my first properties about 3–4 years ago using the house hacking strategy. It currently has an FHA loan with an interest rate around 5.25%. With property values increasing in the area, I've built up a solid amount of equity.
I’m considering tapping into that equity to grow my capital and potentially reinvest, but refinancing right now would likely mean taking on a higher interest rate, which would tighten my margins.
For those of you who’ve been in a similar position—would you move forward with a refinance in this kind of market, or hold off and see how rates play out over the next several months?
Appreciate any insight or experiences you’re willing to share.
The 5.25% is not as cheap as you think because it is an FHA loan. If you purchased prior to March 2023 you are paying .85% in mortgage insurance a month. Assuming a 300k loan that is 212.50 a month with none of that going to principal. Your effective interest rate when taking into account the MIP is 6.10%, not 5.25%.
If you purchased after March 23 the MIP is slightly better at .55% which is 137.50 a month in MIP, so an effective rate of 5.80%. and that MIP cannot be dropped on a FHA loan.
If you are still living in the property you can get cash out rates very similar to those effective rates (assumng good credit) AND get the beenfits of putting the equiy to work as described above.
Hurst Real Estate, INC4.991 Reviews
29 Replies
- 6moErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Korey Ralston:
Good afternoon everyone,
I’m weighing the pros and cons of refinancing one of my properties in today’s market and would really appreciate some input.
I purchased one of my first properties about 3–4 years ago using the house hacking strategy. It currently has an FHA loan with an interest rate around 5.25%. With property values increasing in the area, I've built up a solid amount of equity.
I’m considering tapping into that equity to grow my capital and potentially reinvest, but refinancing right now would likely mean taking on a higher interest rate, which would tighten my margins.
For those of you who’ve been in a similar position—would you move forward with a refinance in this kind of market, or hold off and see how rates play out over the next several months?
Appreciate any insight or experiences you’re willing to share.
Hey Korey!
Have you looked into a HELOC or fixed 2nd instead?
LuxePrivate Investments LLC 572 Reviews- Investor · St. Petersburg, FL · Member since 2026 · 83 posts · 49 votes5mo
Quote from @Erik Estrada:
Quote from @Korey Ralston:
Good afternoon everyone,
I’m weighing the pros and cons of refinancing one of my properties in today’s market and would really appreciate some input.
I purchased one of my first properties about 3–4 years ago using the house hacking strategy. It currently has an FHA loan with an interest rate around 5.25%. With property values increasing in the area, I've built up a solid amount of equity.
I’m considering tapping into that equity to grow my capital and potentially reinvest, but refinancing right now would likely mean taking on a higher interest rate, which would tighten my margins.
For those of you who’ve been in a similar position—would you move forward with a refinance in this kind of market, or hold off and see how rates play out over the next several months?
Appreciate any insight or experiences you’re willing to share.
Hey Korey!
Have you looked into a HELOC or fixed 2nd instead?
Good evening Erik,
Not necessarily. I wanted to see what kind of options were out there. Some things I know about and others I don't, Such as a fixed 2nd. Can you please elaborate?
- 5moErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Korey Ralston:
Quote from @Erik Estrada:
Quote from @Korey Ralston:
Good afternoon everyone,
I’m weighing the pros and cons of refinancing one of my properties in today’s market and would really appreciate some input.
I purchased one of my first properties about 3–4 years ago using the house hacking strategy. It currently has an FHA loan with an interest rate around 5.25%. With property values increasing in the area, I've built up a solid amount of equity.
I’m considering tapping into that equity to grow my capital and potentially reinvest, but refinancing right now would likely mean taking on a higher interest rate, which would tighten my margins.
For those of you who’ve been in a similar position—would you move forward with a refinance in this kind of market, or hold off and see how rates play out over the next several months?
Appreciate any insight or experiences you’re willing to share.
Hey Korey!
Have you looked into a HELOC or fixed 2nd instead?
Good evening Erik,
Not necessarily. I wanted to see what kind of options were out there. Some things I know about and others I don't, Such as a fixed 2nd. Can you please elaborate?
No worries!
On a fixed second mortgage, you are taking out a new mortgage in second position with a 30 year fixed amortization schedule. You will pay monthly principal and interest payments on the total amount you borrow at a fixed interest rate.
LuxePrivate Investments LLC 572 Reviews - Investor · St. Petersburg, FL · Member since 2026 · 83 posts · 49 votes5mo
Quote from @Erik Estrada:
Quote from @Korey Ralston:
Quote from @Erik Estrada:
Quote from @Korey Ralston:
Good afternoon everyone,
I’m weighing the pros and cons of refinancing one of my properties in today’s market and would really appreciate some input.
I purchased one of my first properties about 3–4 years ago using the house hacking strategy. It currently has an FHA loan with an interest rate around 5.25%. With property values increasing in the area, I've built up a solid amount of equity.
I’m considering tapping into that equity to grow my capital and potentially reinvest, but refinancing right now would likely mean taking on a higher interest rate, which would tighten my margins.
For those of you who’ve been in a similar position—would you move forward with a refinance in this kind of market, or hold off and see how rates play out over the next several months?
Appreciate any insight or experiences you’re willing to share.
Hey Korey!
Have you looked into a HELOC or fixed 2nd instead?
Good evening Erik,
Not necessarily. I wanted to see what kind of options were out there. Some things I know about and others I don't, Such as a fixed 2nd. Can you please elaborate?
No worries!
On a fixed second mortgage, you are taking out a new mortgage in second position with a 30 year fixed amortization schedule. You will pay monthly principal and interest payments on the total amount you borrow at a fixed interest rate.
That rate would be todays rate and my original loan would keep its original rate at 5.25%? Would the amount of the second mortgage be the amount of equity that's in the home?
- 6moFrankie VozziBusiness MemberMember since 2025 · 354 posts · 88 votes
You’ve got a solid loan Korey, but the only reason to hold it is if the equity just sits there. If you can pull that capital and turn it into another deal that performs, the higher rate matters a lot less. I’m seeing a lot of investors right now stay stuck because they’re protecting a low rate instead of using their equity to grow. Really comes down to whether you’ve got a strong next move lined up.
- Investor · St. Petersburg, FL · Member since 2026 · 83 posts · 49 votes5mo
Quote from @Frankie Vozzi:
You’ve got a solid loan Korey, but the only reason to hold it is if the equity just sits there. If you can pull that capital and turn it into another deal that performs, the higher rate matters a lot less. I’m seeing a lot of investors right now stay stuck because they’re protecting a low rate instead of using their equity to grow. Really comes down to whether you’ve got a strong next move lined up.
When should you pull your money out when you're searching for your next deal? Is this something that should be done months in advance or something that can be done quickly?
- 5moFrankie VozziBusiness MemberMember since 2025 · 354 posts · 88 votes
Quote from @Korey Ralston:
Quote from @Frankie Vozzi:
You’ve got a solid loan Korey, but the only reason to hold it is if the equity just sits there. If you can pull that capital and turn it into another deal that performs, the higher rate matters a lot less. I’m seeing a lot of investors right now stay stuck because they’re protecting a low rate instead of using their equity to grow. Really comes down to whether you’ve got a strong next move lined up.
When should you pull your money out when you're searching for your next deal? Is this something that should be done months in advance or something that can be done quickly
Good question this is one of those things that depends a lot on how you’re structuring your deals, In most cases, I see investors wait until they actually have a deal lined up rather than pulling money out too early, The reason is once you pull it out, the clock starts—whether it’s interest, payments, or just idle capital not working for you. That said, the ability to move quickly matters too. The investors who are most competitive usually have a plan in place so they can access capital fast when the right deal shows up, It’s less about timing it months in advance, and more about having a structure ready so you’re not scrambling when you need it, Curious how others are handling this pull early for speed, or wait and stay flexible?
Sent you a DM lets connect!
Good question—this is one of those things that depends a lot on how you’re structuring your deals.
In most cases, I see investors wait until they actually have a deal lined up rather than pulling money out too early.
The reason is once you pull it out, the clock starts—whether it’s interest, payments, or just idle capital not working for you.
That said, the ability to move quickly matters too. The investors who are most competitive usually have a plan in place so they can access capital fast when the right deal shows up.
It’s less about timing it months in advance, and more about having a structure ready so you’re not scrambling when you need it.
Curious how others are handling this—pull early for speed, or wait and stay flexible?
Hey @Korey Ralston, welcome to BP!
You’re asking the right question—this really comes down to cost of capital vs. opportunity cost, not just the interest rate.At a 5.25% FHA rate, you're sitting on very cheap money by today's standards, so refinancing just for equity access can be expensive if it forces you into a significantly higher rate across the entire loan.
In most cases like yours, investors tend to avoid touching that first low-rate loan unless:
- There’s a clear reinvestment opportunity with strong returns, or
- They can structure access via a HELOC / second lien instead of replacing the first mortgage
A straight refinance often makes sense only if the capital you unlock is actively going to outperform the increased cost of debt.
If you’re not deploying that equity immediately into a deal with solid returns, holding the current loan and waiting for either better rates or a more strategic pull of equity is usually the more conservative move.
Curious—are you looking to reinvest right away, or just building dry powder for upcoming deals?
- Investor · St. Petersburg, FL · Member since 2026 · 83 posts · 49 votes5mo
Quote from @J Castro:
Hey @Korey Ralston, welcome to BP!
You’re asking the right question—this really comes down to cost of capital vs. opportunity cost, not just the interest rate.At a 5.25% FHA rate, you're sitting on very cheap money by today's standards, so refinancing just for equity access can be expensive if it forces you into a significantly higher rate across the entire loan.
In most cases like yours, investors tend to avoid touching that first low-rate loan unless:
- There’s a clear reinvestment opportunity with strong returns, or
- They can structure access via a HELOC / second lien instead of replacing the first mortgage
A straight refinance often makes sense only if the capital you unlock is actively going to outperform the increased cost of debt.
If you’re not deploying that equity immediately into a deal with solid returns, holding the current loan and waiting for either better rates or a more strategic pull of equity is usually the more conservative move.
Curious—are you looking to reinvest right away, or just building dry powder for upcoming deals?
Hey J,
I appreciate your reply. When it comes to the second lien option, Can you please elaborate? I haven't heard of this strategy before.
Thank you.
- Real Estate Broker · Illinois, FL · Member since 2022 · 22 posts · 4 votes5mo
@Korey Ralston second lien is same as second mortgage = Heloc or Heloan. Both are second lien options difference Is Heloc is more like credit card interest rate is subject to change you pay only on what you pull and it's revolving loan you can use pay it out and use again if needed. Heloan you get lump sum and pay fixed rate on it and once paid you're done
- Real Estate Broker · Illinois, FL · Member since 2022 · 22 posts · 4 votes5moIt depends what’s your long term goals, if it’s for shorter period of time it’s ok to get a Helock and keep lower first position mortgage, but if you don’t pay that heloc in 6-12 months you may want to get either Heloan or refi and pull that equity out, even if you get bigger mortgage rate with your investment and cash flow you can off set that extra 1% of course if it’s a cash flowing investment. If you have any more questions or you want to run some potential scenarios DM me and we can take a look what to expect. I’m a mortgage originator at the one brokerage.
- Investor · St. Petersburg, FL · Member since 2026 · 83 posts · 49 votes5mo
Quote from @Miki Jovanovikj:
It depends what’s your long term goals, if it’s for shorter period of time it’s ok to get a Helock and keep lower first position mortgage, but if you don’t pay that heloc in 6-12 months you may want to get either Heloan or refi and pull that equity out, even if you get bigger mortgage rate with your investment and cash flow you can off set that extra 1% of course if it’s a cash flowing investment. If you have any more questions or you want to run some potential scenarios DM me and we can take a look what to expect. I’m a mortgage originator at the one brokerage.
Good evening Miki,
Running by your scenario If I were to pull a HELOC out on my first property to secure another, would the idea be that the second property is in need of some value add and I would then refi the second property and use those earnings to pay the original HELOC from my first property?
- Real Estate Broker · Illinois, FL · Member since 2022 · 22 posts · 4 votes5mo
Yes you don't want to hold Heloc for too long because it's a higher rate and it's a subject to change. Main goal for people pulling heloc is to keep their low rate mortgage, in your case 5.25 and you pull helock at 7.3 or 7.4 and you hold it long term because you used it fas a down payment 5.25+7.4=12.65/2=6.325 average rate. When you combine both you get average around 6.4. And it will be subject to change, where if you refi you get something close to that but fixed 30year or less unless you find value add property and you fix and refi and pay back your heloc. That's why I said if it's for short term like 6moths to an year it's fine but if you plan to hold it long term it might cost you more than if you were to refi. Depends of the particular scenario, exact numbers need to be run to get better idea what loan product will fit your long term investing.
take care Korey.
if you have any other concerns feel free to ask- Investor · St. Petersburg, FL · Member since 2026 · 83 posts · 49 votes5mo
@Miki Jovanovikj I appreciate your insight. As of right now I think refinancing wouldn't be ideal and if anything pulling a second lien against the house would be the way to go if capital was needed.
- Lender · Chicago, IL · Member since 2025 · 204 posts · 101 votes5moFrom a mortgage perspective, it really comes down to your goal, not just where rates are today. Sitting on a 5.25% FHA loan is a strong position, so refinancing right now will likely increase your rate and your monthly payment. If your goal is to protect your cash flow, I would lean toward holding. That low rate is an asset, and replacing it with a higher one can tighten your margins pretty quickly. If your goal is to tap into your equity to purchase another property, then it could still make sense. The key is making sure the money you pull out is going into a deal that performs better than the cost of the new loan. Another option to consider is a HELOC or second lien, which allows you to access equity without giving up your current low first mortgage. At the end of the day, if you do not have a clear plan for the funds, it may be best to hold. If you do have a solid plan and the numbers work, then using the equity strategically can help you grow. It really comes down to how you want to use it moving forward.
- Investor · St. Petersburg, FL · Member since 2026 · 83 posts · 49 votes5mo
@Ebonie Beaco I appreciate your insight. With taking a second lien out, how does that work and what does that look like?
Quote from @Korey Ralston:
Good afternoon everyone,
I’m weighing the pros and cons of refinancing one of my properties in today’s market and would really appreciate some input.
I purchased one of my first properties about 3–4 years ago using the house hacking strategy. It currently has an FHA loan with an interest rate around 5.25%. With property values increasing in the area, I've built up a solid amount of equity.
I’m considering tapping into that equity to grow my capital and potentially reinvest, but refinancing right now would likely mean taking on a higher interest rate, which would tighten my margins.
For those of you who’ve been in a similar position—would you move forward with a refinance in this kind of market, or hold off and see how rates play out over the next several months?
Appreciate any insight or experiences you’re willing to share.
The 5.25% is not as cheap as you think because it is an FHA loan. If you purchased prior to March 2023 you are paying .85% in mortgage insurance a month. Assuming a 300k loan that is 212.50 a month with none of that going to principal. Your effective interest rate when taking into account the MIP is 6.10%, not 5.25%.
If you purchased after March 23 the MIP is slightly better at .55% which is 137.50 a month in MIP, so an effective rate of 5.80%. and that MIP cannot be dropped on a FHA loan.
If you are still living in the property you can get cash out rates very similar to those effective rates (assumng good credit) AND get the beenfits of putting the equiy to work as described above.
Hurst Real Estate, INC4.991 Reviews- Investor · St. Petersburg, FL · Member since 2026 · 83 posts · 49 votes5mo
Quote from @Jay Hurst:
Quote from @Korey Ralston:
Good afternoon everyone,
I’m weighing the pros and cons of refinancing one of my properties in today’s market and would really appreciate some input.
I purchased one of my first properties about 3–4 years ago using the house hacking strategy. It currently has an FHA loan with an interest rate around 5.25%. With property values increasing in the area, I've built up a solid amount of equity.
I’m considering tapping into that equity to grow my capital and potentially reinvest, but refinancing right now would likely mean taking on a higher interest rate, which would tighten my margins.
For those of you who’ve been in a similar position—would you move forward with a refinance in this kind of market, or hold off and see how rates play out over the next several months?
Appreciate any insight or experiences you’re willing to share.
The 5.25% is not as cheap as you think because it is an FHA loan. If you purchased prior to March 2023 you are paying .85% in mortgage insurance a month. Assuming a 300k loan that is 212.50 a month with none of that going to principal. Your effective interest rate when taking into account the MIP is 6.10%, not 5.25%.
If you purchased after March 23 the MIP is slightly better at .55% which is 137.50 a month in MIP, so an effective rate of 5.80%. and that MIP cannot be dropped on a FHA loan.
If you are still living in the property you can get cash out rates very similar to those effective rates (assumng good credit) AND get the beenfits of putting the equiy to work as described above.
Good afternoon Jay,
I didn't even think about the MIP being a part of the loan. Almost like getting so use to something you forget its there. Once 20% of the loan is paid down it can be removed correct?
Quote from @Korey Ralston:
Quote from @Jay Hurst:
Quote from @Korey Ralston:
Good afternoon everyone,
I’m weighing the pros and cons of refinancing one of my properties in today’s market and would really appreciate some input.
I purchased one of my first properties about 3–4 years ago using the house hacking strategy. It currently has an FHA loan with an interest rate around 5.25%. With property values increasing in the area, I've built up a solid amount of equity.
I’m considering tapping into that equity to grow my capital and potentially reinvest, but refinancing right now would likely mean taking on a higher interest rate, which would tighten my margins.
For those of you who’ve been in a similar position—would you move forward with a refinance in this kind of market, or hold off and see how rates play out over the next several months?
Appreciate any insight or experiences you’re willing to share.
The 5.25% is not as cheap as you think because it is an FHA loan. If you purchased prior to March 2023 you are paying .85% in mortgage insurance a month. Assuming a 300k loan that is 212.50 a month with none of that going to principal. Your effective interest rate when taking into account the MIP is 6.10%, not 5.25%.
If you purchased after March 23 the MIP is slightly better at .55% which is 137.50 a month in MIP, so an effective rate of 5.80%. and that MIP cannot be dropped on a FHA loan.
If you are still living in the property you can get cash out rates very similar to those effective rates (assumng good credit) AND get the beenfits of putting the equiy to work as described above.
Good afternoon Jay,
I didn't even think about the MIP being a part of the loan. Almost like getting so use to something you forget its there. Once 20% of the loan is paid down it can be removed correct?
If you have a 30 year term, and put less then 10% down at purchase the MIP is there for the life of the loan (if you 10% down or more it stays for 11 years). So, no, you will not likely be able to drop it.
That and the 1.75% upfront mortgage insuracne you likely financed into the loan are the main reason I only use FHA if the borrower cannot qualify for conventional, or if their credit score is such that FHA pricing is much better. FHA loans are more expensive in the long run.
But, again, you can refi now at more or less the same cost of debt you have now while pulling out cash to redeploy. Second lien would be a better idea then cash out refi if you had say a 4% or lower effective rate but you would be better off with a cash out.
Hurst Real Estate, INC4.991 Reviews- Investor · St. Petersburg, FL · Member since 2026 · 83 posts · 49 votes5mo
Quote from @Jay Hurst:
Quote from @Korey Ralston:
Quote from @Jay Hurst:
Quote from @Korey Ralston:
Good afternoon everyone,
I’m weighing the pros and cons of refinancing one of my properties in today’s market and would really appreciate some input.
I purchased one of my first properties about 3–4 years ago using the house hacking strategy. It currently has an FHA loan with an interest rate around 5.25%. With property values increasing in the area, I've built up a solid amount of equity.
I’m considering tapping into that equity to grow my capital and potentially reinvest, but refinancing right now would likely mean taking on a higher interest rate, which would tighten my margins.
For those of you who’ve been in a similar position—would you move forward with a refinance in this kind of market, or hold off and see how rates play out over the next several months?
Appreciate any insight or experiences you’re willing to share.
The 5.25% is not as cheap as you think because it is an FHA loan. If you purchased prior to March 2023 you are paying .85% in mortgage insurance a month. Assuming a 300k loan that is 212.50 a month with none of that going to principal. Your effective interest rate when taking into account the MIP is 6.10%, not 5.25%.
If you purchased after March 23 the MIP is slightly better at .55% which is 137.50 a month in MIP, so an effective rate of 5.80%. and that MIP cannot be dropped on a FHA loan.
If you are still living in the property you can get cash out rates very similar to those effective rates (assumng good credit) AND get the beenfits of putting the equiy to work as described above.
Good afternoon Jay,
I didn't even think about the MIP being a part of the loan. Almost like getting so use to something you forget its there. Once 20% of the loan is paid down it can be removed correct?
If you have a 30 year term, and put less then 10% down at purchase the MIP is there for the life of the loan (if you 10% down or more it stays for 11 years). So, no, you will not likely be able to drop it.
That and the 1.75% upfront mortgage insuracne you likely financed into the loan are the main reason I only use FHA if the borrower cannot qualify for conventional, or if their credit score is such that FHA pricing is much better. FHA loans are more expensive in the long run.
But, again, you can refi now at more or less the same cost of debt you have now while pulling out cash to redeploy. Second lien would be a better idea then cash out refi if you had say a 4% or lower effective rate but you would be better off with a cash out.
Is this something that occurs only for FHA loans? Lets say I had a conventional loan and only put 5% down and eventually paid 20% of the loan off, would the MIP come off then with it being conventional?
Quote from @Korey Ralston:
Quote from @Jay Hurst:
Quote from @Korey Ralston:
Quote from @Jay Hurst:
Quote from @Korey Ralston:
Good afternoon everyone,
I’m weighing the pros and cons of refinancing one of my properties in today’s market and would really appreciate some input.
I purchased one of my first properties about 3–4 years ago using the house hacking strategy. It currently has an FHA loan with an interest rate around 5.25%. With property values increasing in the area, I've built up a solid amount of equity.
I’m considering tapping into that equity to grow my capital and potentially reinvest, but refinancing right now would likely mean taking on a higher interest rate, which would tighten my margins.
For those of you who’ve been in a similar position—would you move forward with a refinance in this kind of market, or hold off and see how rates play out over the next several months?
Appreciate any insight or experiences you’re willing to share.
The 5.25% is not as cheap as you think because it is an FHA loan. If you purchased prior to March 2023 you are paying .85% in mortgage insurance a month. Assuming a 300k loan that is 212.50 a month with none of that going to principal. Your effective interest rate when taking into account the MIP is 6.10%, not 5.25%.
If you purchased after March 23 the MIP is slightly better at .55% which is 137.50 a month in MIP, so an effective rate of 5.80%. and that MIP cannot be dropped on a FHA loan.
If you are still living in the property you can get cash out rates very similar to those effective rates (assumng good credit) AND get the beenfits of putting the equiy to work as described above.
Good afternoon Jay,
I didn't even think about the MIP being a part of the loan. Almost like getting so use to something you forget its there. Once 20% of the loan is paid down it can be removed correct?
If you have a 30 year term, and put less then 10% down at purchase the MIP is there for the life of the loan (if you 10% down or more it stays for 11 years). So, no, you will not likely be able to drop it.
That and the 1.75% upfront mortgage insuracne you likely financed into the loan are the main reason I only use FHA if the borrower cannot qualify for conventional, or if their credit score is such that FHA pricing is much better. FHA loans are more expensive in the long run.
But, again, you can refi now at more or less the same cost of debt you have now while pulling out cash to redeploy. Second lien would be a better idea then cash out refi if you had say a 4% or lower effective rate but you would be better off with a cash out.
Is this something that occurs only for FHA loans? Lets say I had a conventional loan and only put 5% down and eventually paid 20% of the loan off, would the MIP come off then with it being conventional?
Yes, FHA is for the life of the loan while conventional loan has options to drop MI evetually. But even conventional is a bit complicated: https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-p...
Hurst Real Estate, INC4.991 Reviews- Lender · Lake City, MI · Member since 2019 · 118 posts · 42 votes5mo
Quote from @Korey Ralston:
Quote from @Jay Hurst:
Quote from @Korey Ralston:
Quote from @Jay Hurst:
Quote from @Korey Ralston:
Good afternoon everyone,
I’m weighing the pros and cons of refinancing one of my properties in today’s market and would really appreciate some input.
I purchased one of my first properties about 3–4 years ago using the house hacking strategy. It currently has an FHA loan with an interest rate around 5.25%. With property values increasing in the area, I've built up a solid amount of equity.
I’m considering tapping into that equity to grow my capital and potentially reinvest, but refinancing right now would likely mean taking on a higher interest rate, which would tighten my margins.
For those of you who’ve been in a similar position—would you move forward with a refinance in this kind of market, or hold off and see how rates play out over the next several months?
Appreciate any insight or experiences you’re willing to share.
The 5.25% is not as cheap as you think because it is an FHA loan. If you purchased prior to March 2023 you are paying .85% in mortgage insurance a month. Assuming a 300k loan that is 212.50 a month with none of that going to principal. Your effective interest rate when taking into account the MIP is 6.10%, not 5.25%.
If you purchased after March 23 the MIP is slightly better at .55% which is 137.50 a month in MIP, so an effective rate of 5.80%. and that MIP cannot be dropped on a FHA loan.
If you are still living in the property you can get cash out rates very similar to those effective rates (assumng good credit) AND get the beenfits of putting the equiy to work as described above.
Good afternoon Jay,
I didn't even think about the MIP being a part of the loan. Almost like getting so use to something you forget its there. Once 20% of the loan is paid down it can be removed correct?
If you have a 30 year term, and put less then 10% down at purchase the MIP is there for the life of the loan (if you 10% down or more it stays for 11 years). So, no, you will not likely be able to drop it.
That and the 1.75% upfront mortgage insuracne you likely financed into the loan are the main reason I only use FHA if the borrower cannot qualify for conventional, or if their credit score is such that FHA pricing is much better. FHA loans are more expensive in the long run.
But, again, you can refi now at more or less the same cost of debt you have now while pulling out cash to redeploy. Second lien would be a better idea then cash out refi if you had say a 4% or lower effective rate but you would be better off with a cash out.
Is this something that occurs only for FHA loans? Lets say I had a conventional loan and only put 5% down and eventually paid 20% of the loan off, would the MIP come off then with it being conventional?
Hey Kory
On a conventional loan, once you hit the loan to value of 80% (20% paid off) you send a request to your lender and they will remove the PMI. You do not necessarily have to pay 20%, you can also get there by increase the value of the property (through improvements, appreciation...etc)
If I was in your shoes and was looking to access the capital for future investments I would do a cash-out refinance, and use that new capital to purchase the next property. I personally would not do a Heloc or second position loan because when you do the math on the interest rates of having 2 loans on a property vs 1 loan it ends up making the overall interest higher across the total debt. Plus you have 2 payments instead of 1. - Investor · St. Petersburg, FL · Member since 2026 · 83 posts · 49 votes5mo
Quote from @Bryce Fairburn:
Quote from @Korey Ralston:
Quote from @Jay Hurst:
Quote from @Korey Ralston:
Quote from @Jay Hurst:
Quote from @Korey Ralston:
Good afternoon everyone,
I’m weighing the pros and cons of refinancing one of my properties in today’s market and would really appreciate some input.
I purchased one of my first properties about 3–4 years ago using the house hacking strategy. It currently has an FHA loan with an interest rate around 5.25%. With property values increasing in the area, I've built up a solid amount of equity.
I’m considering tapping into that equity to grow my capital and potentially reinvest, but refinancing right now would likely mean taking on a higher interest rate, which would tighten my margins.
For those of you who’ve been in a similar position—would you move forward with a refinance in this kind of market, or hold off and see how rates play out over the next several months?
Appreciate any insight or experiences you’re willing to share.
The 5.25% is not as cheap as you think because it is an FHA loan. If you purchased prior to March 2023 you are paying .85% in mortgage insurance a month. Assuming a 300k loan that is 212.50 a month with none of that going to principal. Your effective interest rate when taking into account the MIP is 6.10%, not 5.25%.
If you purchased after March 23 the MIP is slightly better at .55% which is 137.50 a month in MIP, so an effective rate of 5.80%. and that MIP cannot be dropped on a FHA loan.
If you are still living in the property you can get cash out rates very similar to those effective rates (assumng good credit) AND get the beenfits of putting the equiy to work as described above.
Good afternoon Jay,
I didn't even think about the MIP being a part of the loan. Almost like getting so use to something you forget its there. Once 20% of the loan is paid down it can be removed correct?
If you have a 30 year term, and put less then 10% down at purchase the MIP is there for the life of the loan (if you 10% down or more it stays for 11 years). So, no, you will not likely be able to drop it.
That and the 1.75% upfront mortgage insuracne you likely financed into the loan are the main reason I only use FHA if the borrower cannot qualify for conventional, or if their credit score is such that FHA pricing is much better. FHA loans are more expensive in the long run.
But, again, you can refi now at more or less the same cost of debt you have now while pulling out cash to redeploy. Second lien would be a better idea then cash out refi if you had say a 4% or lower effective rate but you would be better off with a cash out.
Is this something that occurs only for FHA loans? Lets say I had a conventional loan and only put 5% down and eventually paid 20% of the loan off, would the MIP come off then with it being conventional?
Hey Kory
On a conventional loan, once you hit the loan to value of 80% (20% paid off) you send a request to your lender and they will remove the PMI. You do not necessarily have to pay 20%, you can also get there by increase the value of the property (through improvements, appreciation...etc)
If I was in your shoes and was looking to access the capital for future investments I would do a cash-out refinance, and use that new capital to purchase the next property. I personally would not do a Heloc or second position loan because when you do the math on the interest rates of having 2 loans on a property vs 1 loan it ends up making the overall interest higher across the total debt. Plus you have 2 payments instead of 1.Hey, I appreciate you breaking that down, that helps a lot.
The clarification on PMI and hitting that 80% LTV through either paydown or forced appreciation makes sense. That's actually what I've been trying to think through more as I learn the BRRRR approach/how to create that equity intentionally.
Your point on the cash-out refi vs. HELOC is interesting too. I hadn't fully thought through the long-term cost difference of carrying two loans vs. just resetting into one, especially with rates where they are now. The simplicity of one payment is definitely appealing as well.
When you’re looking at a cash-out refi, what kind of deal metrics or cushion do you like to see before pulling the trigger? I’m trying to get a better feel for what a “safe” refi looks like in your experience.
- Investor · Hendersonville, NC · Member since 2016 · 498 posts · 285 votes5mo
Quote from @Jay Hurst:
Quote from @Korey Ralston:
Good afternoon everyone,
I’m weighing the pros and cons of refinancing one of my properties in today’s market and would really appreciate some input.
I purchased one of my first properties about 3–4 years ago using the house hacking strategy. It currently has an FHA loan with an interest rate around 5.25%. With property values increasing in the area, I've built up a solid amount of equity.
I’m considering tapping into that equity to grow my capital and potentially reinvest, but refinancing right now would likely mean taking on a higher interest rate, which would tighten my margins.
For those of you who’ve been in a similar position—would you move forward with a refinance in this kind of market, or hold off and see how rates play out over the next several months?
Appreciate any insight or experiences you’re willing to share.
The 5.25% is not as cheap as you think because it is an FHA loan. If you purchased prior to March 2023 you are paying .85% in mortgage insurance a month. Assuming a 300k loan that is 212.50 a month with none of that going to principal. Your effective interest rate when taking into account the MIP is 6.10%, not 5.25%.
If you purchased after March 23 the MIP is slightly better at .55% which is 137.50 a month in MIP, so an effective rate of 5.80%. and that MIP cannot be dropped on a FHA loan.
If you are still living in the property you can get cash out rates very similar to those effective rates (assumng good credit) AND get the beenfits of putting the equiy to work as described above.
Your math on the effective cost of that FHA loan is solid and often overlooked. If you’re refinancing and rates are higher than your current effective rate, it’s probably going to squeeze your cash flow, especially once you factor in closing costs. I’d weigh how much equity you really need to pull out versus how tight your operating margins get after the refi. Sometimes it’s just smarter to hold steady and look for other ways to raise capital or improve cash flow before refinancing. . - Investor · St. Petersburg, FL · Member since 2026 · 83 posts · 49 votes5mo
Quote from @Dominic Mazzarella:
Quote from @Jay Hurst:
Quote from @Korey Ralston:
Good afternoon everyone,
I’m weighing the pros and cons of refinancing one of my properties in today’s market and would really appreciate some input.
I purchased one of my first properties about 3–4 years ago using the house hacking strategy. It currently has an FHA loan with an interest rate around 5.25%. With property values increasing in the area, I've built up a solid amount of equity.
I’m considering tapping into that equity to grow my capital and potentially reinvest, but refinancing right now would likely mean taking on a higher interest rate, which would tighten my margins.
For those of you who’ve been in a similar position—would you move forward with a refinance in this kind of market, or hold off and see how rates play out over the next several months?
Appreciate any insight or experiences you’re willing to share.
The 5.25% is not as cheap as you think because it is an FHA loan. If you purchased prior to March 2023 you are paying .85% in mortgage insurance a month. Assuming a 300k loan that is 212.50 a month with none of that going to principal. Your effective interest rate when taking into account the MIP is 6.10%, not 5.25%.
If you purchased after March 23 the MIP is slightly better at .55% which is 137.50 a month in MIP, so an effective rate of 5.80%. and that MIP cannot be dropped on a FHA loan.
If you are still living in the property you can get cash out rates very similar to those effective rates (assumng good credit) AND get the beenfits of putting the equiy to work as described above.
Your math on the effective cost of that FHA loan is solid and often overlooked. If you’re refinancing and rates are higher than your current effective rate, it’s probably going to squeeze your cash flow, especially once you factor in closing costs. I’d weigh how much equity you really need to pull out versus how tight your operating margins get after the refi. Sometimes it’s just smarter to hold steady and look for other ways to raise capital or improve cash flow before refinancing. .Yeah that’s exactly what I’ve been starting to realize. On paper the refi always looks like the "next step,” but once you actually factor in the effective rate + closing costs, it can end up hurting more than helping—especially if the cash flow gets tight.
I’m kind of debating whether it makes more sense to just leave some money in the deal and keep a better payment, vs forcing the refi just to pull equity out. The liquidity is nice, but not if it puts the deal in a weaker position month to month.
Have you found it’s usually better to optimize for cash flow first, then tap equity later? Or do you still try to pull as much out as possible upfront?
- 5moColleen F.Pro MemberInvestor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
@Korey Ralston Also you have to see what you would wind up with as cash out on a second loan vs a refinance. See what the Helco limits vs cash out refinance amounts are. Of course factor in the PMI. Chances are you will be able to pull more equity with a refinance but it really depends on how much the property has appreciated and your original numbers.
- 5moJacob CamhiBusiness MemberHinton, WV · Member since 2026 · 132 posts · 40 votes
Hey, love that you got started with a house hack and have real equity in there already. That is a great spot to be in a few years out.
If this were me, I would frame it less as “are rates good or bad right now” and more as “what exactly am I giving up and what exactly am I getting.” On one side you have what you have today: a 5.25% payment, the cash flow you are used to, and a pretty forgiving cushion if rents pull back. On the other side is a new loan with a higher rate, higher payment, closing costs, and a chunk of cash you can put to work in the next deal.
So I would actually put two simple pictures on paper. First, your current property: true monthly cash flow today after all expenses and reserves. Second, a refi scenario: new rate, new payment, new cash flow on this property, plus how much cash you would walk away with and what specific type of deal you would use it for. If the refi leaves this place very skinny and you are not crystal clear on how you will turn the pulled equity into a better return somewhere else, there is nothing wrong with just letting this loan ride and keep quietly paying itself down.
If, on the other hand, you can refi, still keep comfortable cash flow and DSCR on this property, and you already have a realistic path to put that cash into another solid buy, then accepting a higher rate can still be a smart portfolio move. The key is to compare "after refi cash flow and reserves" against "what I can realistically earn with the new capital," instead of trying to guess where rates might be in six months.
- Investor · St. Petersburg, FL · Member since 2026 · 83 posts · 49 votes5mo
Quote from @Jacob Camhi:
Hey, love that you got started with a house hack and have real equity in there already. That is a great spot to be in a few years out.
If this were me, I would frame it less as “are rates good or bad right now” and more as “what exactly am I giving up and what exactly am I getting.” On one side you have what you have today: a 5.25% payment, the cash flow you are used to, and a pretty forgiving cushion if rents pull back. On the other side is a new loan with a higher rate, higher payment, closing costs, and a chunk of cash you can put to work in the next deal.
So I would actually put two simple pictures on paper. First, your current property: true monthly cash flow today after all expenses and reserves. Second, a refi scenario: new rate, new payment, new cash flow on this property, plus how much cash you would walk away with and what specific type of deal you would use it for. If the refi leaves this place very skinny and you are not crystal clear on how you will turn the pulled equity into a better return somewhere else, there is nothing wrong with just letting this loan ride and keep quietly paying itself down.
If, on the other hand, you can refi, still keep comfortable cash flow and DSCR on this property, and you already have a realistic path to put that cash into another solid buy, then accepting a higher rate can still be a smart portfolio move. The key is to compare "after refi cash flow and reserves" against "what I can realistically earn with the new capital," instead of trying to guess where rates might be in six months.
This all makes a lot of sense in theory, but I’m getting stuck on the practical side of actually pulling the numbers together in a reliable way.
Where would you go to get accurate inputs for this kind of comparison?
For the current property, I can estimate cash flow from my own records, but I’m not totally confident I’m capturing everything correctly—things like maintenance, reserves, vacancies, and the hidden costs that don’t show up month to month.
And for the refi scenario, is that something you typically build from lender quotes, or is there a better way to model it before seriously engaging with one?
Same question on the capital deployment side, do you just run comps and do rough deal analysis based on current listings, or is there a more structured way or tool people use to make those assumptions more realistic instead of hypothetical?
I guess I’m trying to figure out what people actually use to turn this from a rough gut check into a true apples-to-apples decision.
- 5moVijay FriedmanBusiness MemberMiami, FL · Member since 2026 · 766 posts · 123 votes
At 5.25% FHA, your loan is an asset, you don't replace it lightly.
Refinancing right now usually means:
- higher rate
- tighter cash flow
- and giving up a very good loan
So the question isn’t “should I refi?” it’s:
what am I getting in return for losing that rate?If you’re just pulling equity to hold, I’d lean no.
If you have a clear reinvestment plan that beats the cost of the new debt, then maybe.Also consider:
- FHA → conventional refi = different terms + PMI dynamics
- cash-out LTV limits will cap how much you can actually pull
- your deal needs to still work at today’s rates, not yesterday’s
A lot of investors regret trading low-rate debt for liquidity without a defined use.
I’d only move forward if:
- the new deal clearly outperforms the cost of capital
- and your current property still cash flows comfortably after the refi
If you want, send over your current value + loan balance. I can help you quickly run a real “refi vs keep” scenario based on today’s rates.
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