Pay down mortgage on existing property?

Question

Here’s the gist

• I owe 100k on an investment property
• I have about 100k in equity in that property
• I have $50K I’d like to invest
• I will be refinancing to take advantage of low interest rates (my current interest rate is 4.75!)
• 780 credit score

Questions –

• Should I use a portion of the $50K to pay down the amount that I owe on the home while refinancing?
• Should I use that money elsewhere and buy another investment property?
• Should I go all in and cash out some equity to finance the next property?

Thanks in advance for the advice - Dutch

Joe Villeneuve · Answer

Answers to each question:

1 - Why in the world would you buy money from your property, then pay that property back using the same money you just bought from it?  How many times are you planning on paying for this property?

2 - Yes

3 - Maybe.  If you end up getting negative CF or very little CF from the REFI on the property you refi'd, then no.  This means you are losing money on this property...even without refinancing.  You should sell the property, take the equity, now converted from dead cash to liquid cash, and buy a new property.

Theresa Harris · Answer

If you want to buy more rentals, use the money as the down payment for that.  With any extra cash decide what you want to do-more rentals or other investments and then look at the rate of return vs what you'd save based on the interest rate for your mortgage.

Chase Lowry · Answer

It depends on your goals... However, I would not pay down the amount that you owe! I would do a cashout refi on your existing property and use that and your existing 50k to invest.

Pay down mortgage on existing property?

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