pay down Jumbo Loan or buy a rental ?

[Sayli Mulay]

I plan to refinance my primary residence (Bay Area,CA). I currently have jumbo loan at 3.75% and $70k cash saved up. I am thinking of 2 options -

#1. If I refi and pay down some of the principal (about $70k), I would get much better rate (because I can get rid of jumbo loan) and that will save me about $600 per month

#2. if I refi without the principle pay down, then I would get not-so-good rate and my payment will be reduced only by 200 per month but I can invest that 70k to purchase another rental (OOS of course) which probably would cashflow about 200 per month

What would you do ? - refi out of jumbo loan to save extra $400 or buy a rental that cashflows $200 ?