Loan interest rate question
Ok this one might be hard to explain...
I want to either refinance my paid off SFR or get a HELOC so I can buy a rental property. So far I have determined that my rate at least for a refinance will be about 5.25 for loan. Lets say my house is worth 100k and the LTV on the refinance is 70 so I can get 70k out of it to put towards a rental property.
Now lets say I find a rental property worth 200k and put down my 70k on it and finance the rest (130k loan). Also lets say the rate on the 130k 30-year fixed loan is 4.25. Finally here comes my question:
When using the BP rental calculator, I am unsure which loan rate to put into the 'interest rate' field on the calculator. In this scenario, the rental property's loan (130k) rate is only 4.25 but the SFR that I get the equity out of is 5.25. So which interest rate do I use to figure out if it's a good deal to buy a property or not? It's either 4.25, 5.25, or do I add them together since I am essentially paying two loans. I can't imagine being able to find a good deal that allows to me to make good cash flow and pay off 9.5% in interest. Help!