Asked by liduruo518  |  Submitted June 17, 2016

Should I refinance my primary home to pay down a rental home?

My primary home in GA is worth about $190,000 with a $75,000 loan balance at 3.6%. My rental in PA is worth about $120,000 with a $95,000 balance at 5.5%. I'm thinking of taking a cash-out refinance on the GA home to pay off/down the PA rental. Is now the time?

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  Answers  |  2

June 17, 2016

Leveraging the equity from your primary residence to consolidate other mortgage debt can be very enticing with today's low mortgage rates. On the surface, it doesn't appear that you have enough equity on your primary residence to pay off the mortgage on the investment property in full. Shifting all the liability onto your primary residence can be risky if you're not aware of the tax consequences and impact on your capital gains for the investment property. This is definitely a conversation that you should have in more detail with not only your local mortgage professional, but also your CPA and financial advisor so as to make sure that it meets your long-term financial goals.

$commenter.renderDisplayableName() | 07.23.17 @ 16:51

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June 28, 2016

Please do not put any additional debt on your primary residence. If I were you, I would pay off all debts from the smallest to the largest. Put an emergency fund away 6 months of expenses. Then start funding my retirement account at 15% of annual income. Then I would put all additional money toward my primary residence mortgage payoff. Then payoff the rental or sell it.

$commenter.renderDisplayableName() | 07.23.17 @ 16:51

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