Profile picture for btmann

can I pay off an investment property by refinancing primary residence and taking cash out for payoff

Can I use this method to consolidate both mortgages into one?

  • August 02 2010 - Los Gatos
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Answers (9)

Profile picture for Justin Kennedy
Ask you CPA how the new primary home loan will be treat for tax purposes; the cashout portion may not be tax deductable.
  • August 08 2010
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Profile picture for Save Financial

You can do anything you want with your money... Refinancing lender might ask what the reason for cashout is. So i suggest you don't give them too much information.  Sometimes Less is More.
just a suggestion.

  • August 07 2010
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Profile picture for rentlawcom
Yes. It's a great idea, since it's easier to get a loan on a primary residence AND:

1. You may lower your current rate on your primary

2. Your primary will have to appraise high enough.

3. Your lender may take a mortgage as a backup  to your primary if needed. 2 for 1 loan.

Another option - maybe cheaper - look for a home equity loan on your primary

More information on financing on RentLaw.com The National Landlord Tenant Guides.

Good luck, smart move.
  • August 02 2010
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Yes, you can. And it is good move if you can save couple hundreds dollars a month from it, the otherwise don't do it.
  • August 02 2010
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Yes, it is all dependent on the amount of equity you have in your primary residence. This is used quite often for debt consolidation of various natures. Good Luck!
  • August 02 2010
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Profile picture for SoCal Engr
You might be able to, but I'm with Jeannette. Why further mortgage your primary residence to secure an investment property? If anything, I'd believe the priority should be 180-out.

Talk to an accountant, but there are a lot more games that can be played with investment/income property than with primary residences. If I were in your shoes, my goals would be to (a) protect the primmary residence from any downside with the investment property, and (b) figure out how to best maximize the potential from the investment property.
  • August 02 2010
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Yes, you can refinance your primary residence and 'cash out', provided that you have equity in your primary property.

Then after you 'cash out' you can use that money to pay off your investment property. However you cannot consolidate both properties into one mortgage, because only one property can be mortgaged at a time.  Each property has to be appraised independently, thereby each property has its own value.   

You can consolidate credit card debt, because it's unsecured debt.  But a property is secured debt, therefore you cannot have two secured debts with only one mortgage.
  • August 02 2010
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This obviously better answered by a lender but in general terms ....

One thing to consider if you proceeded with a refi is that your main residence will become more vulnerable should your income change. It might be a better way to proceed to have your main residence paid off rather than a rental.

Refi's are much more difficult now as are home equity lines of credit. In Spokane WA the local banks are much more flexible than the larger national ones especially if they have the ability to portfolio the loan. Chat to the banks in your area and see what they have to say.
  • August 02 2010
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Profile picture for CA Direct Lending
Absolutely!
  • August 02 2010
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