When to go for a refi on a house

5 Replies


Just wondering what some of you thought out best course of action would be.  Pretty simple setup:

1. We own a house (a second house, not our primary)

2. House is valued at about 120-140k

3. We own about 48k on it.

4. Just put about 18k into it getting it ready to rent (we don't want to sell as we may move back into it in 5 years or so).

5. We want to pull some equity out for reinvestment in other projects.

The question, should we wait until we get a renter in with a lease to show the bank that it is producing revenue or just go for a new regular mortgage? We already have a HELOC on our main house, so the money from the refi would probably just pay that one down as a mortgage rate would probably be lower than the rate on our HELOC (4.5%).

Thanks in advance for any feedback.


If you have a fixed rate HELOC on your primary at 4.5%, unless you are considering an ARM product for refi, you are likely not going to save much, if any, on the rate. Your refi will be a cash-out on a 2nd home. Plus, have the expenses of the refinance. My idea would be to put the renter in place, use the cash flow from the rents to pay down your existing HELOC and save yourself the cost of a new loan and,an additional lien on the home. I would also ask the lender with the HELOC for a line increase. That's my 0.02 worth.

A bit more info on my end:

My current HELOC is for 124k, of which only 4k is available. Actual numbers spent was wrong as I did not take into account property taxes and other incurred expenses. Actual dollars invested to date to both keep the 2nd house and reno is over 20k. I would like to pull the 20k back out of it, plus an additional 30k. This would provide funds for continuing rehab on a restaurant that I am opening (I own the building for the restaurant - owe 50k against a building that was purchased for 150k and has had 40k or so worth of repairs and improvements to date.)


Unless I am missing something however, going that route will only pay down my current heloc while still leaving all the equity tied up in the 2nd house.  I am needing access to funds quicker than that.  Or did I miss something?  100% of the rent is able to go towards debt service and there is income and credit score enough to support the refi (I think at least).


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