Cash Out Refinance for student loans?

Question

Should I cash out equity in one of my rentals to pay student loans?2 years ago I bought a duplex for $123,00.  Current mortgage is $110k @ 4.2% interest.

Current price is about $200k for Market comparables for 2 exactly the same on my street.

I have about $23k left on my student loans.  Would it be wise to ReFi my duplex at 75% LTV?

Making the mortgage $150K and pulling out about $40k in equity.Rent roll is: Unit A - $850, Unit B: $600 = $1450/monthly

Current PITI payment is about $940

Part of me wants to keep the mortgage payment low and work to up the rents, therefore increasing the spread of my cash flow. Other part of me wonders if I should cash out ReFi and become debt free (minus all mortgages I hold on rentals).

Thoughts? Anyone make the decision to do this recently?

Seth Macomber · Answer

I like the idea of investing in another property with the equity you have.

Sam White · Answer

Yeah, It hasn't really hurt me yet... But with multiple mortgages now, I imagine the DTI will effect soon.

Sam White · Answer

5.5% fixed on all student loans.

I am deducting the interest, yes.

Sam White · Answer

Theresa, that is exactly my thought at the moment.  Right now, my cash flow pays my student loan payment.  I like the idea of not having the student loan on my books.  It is a psychological thing.

But I don't know if it is worth putting more debt on the duplex.

"Dont mess with the golden goose" mindset.

Theresa White · Answer

Just an idea...any chance your finances will support you using the cash-out for a down payment on another property with cash flow that will cover your student loan payment?  If so, your student loan payment goes away, and you have new tenants building up your equity in your new property.

Just remember closing costs on the refi will eat into what you walk away with (so, $40k less closing costs), and there's a chance you won't be able to beat your current interest rate.