Asked by Michael  |  Submitted April 28, 2015

I want to refinance but which home should I refinance? My home that I live in is valued at $150K and I owe $2K. My investment property is valued at $145K and I owe $76K.

The interest rate on the investment property is 4.5% and on my home it is $7.5%. Which home should I refinance as I am planning on selling the investment property?

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  Answers  |  2

April 28, 2015

Hello Michael:

Based on your numbers, you should be able to refinance both properties (of course as long as you qualify on all other required guidelines). However if you are looking to refinance just one property per your question, my opinion would be to absolutely refinance your current primary home. A 7.5% interest rate can be potentially be reduced by as much as 3-4 percentage points in today's environment. Investment property rates are higher and you may not be able to reduce your rate enough to justify the refinance & costs. Furthermore, you are going to sell the investment property so incurring any costs now would likely not be in your best interest.

$commenter.renderDisplayableName() | 10.01.20 @ 19:45


April 29, 2015

Hi - If you are selling the investment property refinancing will only cost you more money than simply selling. As for your residence, I don't know why you would re-finance since it is nearly paid off. Bottom line: sell the investment property, pay off the mortgage on the residence with some of the proceeds and put the rest in the bank or an investment account. Good luck!

$commenter.renderDisplayableName() | 10.01.20 @ 19:45