Refinance vs. Cash Down to keep current Interest Rate

[Jackson Walker]

Hello,

My team is looking to purchase our second investment property now that our fist property has gained significant equity.

Our question is whether we should finance the second property by refinancing our current loan and leveraging the equity we've gained, or leaving it alone and putting down cash for the new mortgage down payment.

The argument for not refinancing is that we were able to secure a relatively low interest rate on our first property (3.3%), and we don't want to refinance and lose that good rate.

On the other hand, it seems like leveraging the equity we've gained on the first property is a more efficient use of our money. The extra money we would use to put cash down could be used in other investments with an expected 10% return.

Does anybody have experience making a similar decision. Is there a good way to tangibly evaluate these options? How important is keeping the fixed 3.3% interest rate on our first property?

Thanks!

[Steven Foster Wilson]

Quote from @Jackson Walker:

Hello,

My team is looking to purchase our second investment property now that our fist property has gained significant equity.

Our question is whether we should finance the second property by refinancing our current loan and leveraging the equity we've gained, or leaving it alone and putting down cash for the new mortgage down payment.

The argument for not refinancing is that we were able to secure a relatively low interest rate on our first property (3.3%), and we don't want to refinance and lose that good rate.

On the other hand, it seems like leveraging the equity we've gained on the first property is a more efficient use of our money. The extra money we would use to put cash down could be used in other investments with an expected 10% return.

Does anybody have experience making a similar decision. Is there a good way to tangibly evaluate these options? How important is keeping the fixed 3.3% interest rate on our first property?

Thanks!

 This is a tough question. I too am going through something similar. I have around $300k locked away in a duplex with a rate of 3.5%. I do want to access my equity, but I don't want to screw myself with a doubled rate. 

One thing Ive thought about doing is a 90% HELOC to access the equity as a line of credit of sorts.