Unpopular opinion: everybody says use a rate-and-term refi instead of cash out, but I did cash out on my rental in Cleveland last month and it worked better for me.

I needed 18k to fix up a duplex I bought in 2021. Everyone on forums told me to do a rate-and-term refi instead to keep the loan smaller. But I ran the numbers and my rate only went from 6.2 to 6.5, so for 0.3 points I pulled out the cash. The rent covers the new payment easy after the repairs boosted the value. Has anyone else found cash out actually made sense when everyone told you not to?

2 comments

2 Comments

diana_black221mo ago

Oh man I just read this article that said exactly what you found, that sometimes the cash out makes way more sense if your rate barely moves. People get so stuck on the rules but 0.3 points for 18k in repairs that boosted rent sounds like a no brainer honestly.

wyatt_shah851mo ago

Yeah, "0.3 points for 18k in repairs that boosted rent" is pretty much exactly what happened to me. I mean, idk why everyone acts like a rate jump of any size is the end of the world. Maybe it's just me but if the numbers work they work. I'm not gonna lie, I kinda felt like a genius for about a week until I realized I still have to deal with tenants and plumbing and all that fun stuff. Guess I'm not smarter than the internet, just lucky this once.