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should we refinance a paid off rental property to pay off primary house

by Charlie from Palos Verdes Peninsula, California. Apr 23rd 2013 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

As a real estate investor with 25 years experience, I will say that you have greater more beneficial write-offs on a rental property vs. a primary residence. But everyone's goals and scenarios are different. So the best advice I can give you is to contact your CPA or tax advisor and run your idea past them... .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Apr 23rd 2013
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,944 contributions

Each person and situation is different... But I would not refinance a rental property simply for the sake of paying off a primary property. You get tax write offs on the rental property. Talk to your tax provider to determine the benefits. Also, investment property interest rates run higher. On the other hand, if refinancing in and of itself makes sense, then go ahead and refinance.

Apr 24th 2013
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Charlie Sparks (CharlieSparks)
#9 ranked lender in New Mexico - 398 contributions

see other post

Apr 23rd 2013
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Bruce Specter (NvMortgageMan)
#27 ranked lender in Nevada - 7 contributions

An excellent question that gets asked quiet a bit. The answer would be best provided by your financial advisor and your CPA, as without knowing the details of your complete financial picture, I would not be in a position to provide an answer. There are numerous factors that these professionals will know or need to know in order to best guide you. Being part of a WealthCare team (wealth management is team sport!), I rely heavily on my professional partners to make sure those questions are answered by those best suited to do so. I would be happy to provide additional direction from a mortgage perspective, based on their recommendations for you.

Apr 23rd 2013
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Michael Ertem (mertem)
#431 ranked lender in California - 6 contributions

I would not pay off primary residence by getting a mortgage from rental property. Interest rates are higher on investment properties and also you would pay more in fees for getting cash out. You may consider refinancing your primary residence if your interest rate is higher than todays rates which is in mid 3s...Call me to determine if this a good option for you. www.michaelertem.comMichael Ertem

Apr 23rd 2013
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Ed Craine (ecraine)
#352 ranked lender in California - 23 contributions

Depends on a variety of factors unique to you. Best approach is a team approach with your tax advisor, financial advisor and mortgage professional working together to provide you information that will inform your decision.

Apr 23rd 2013
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Jason Vondrak (jvondrak)
#218 ranked lender in California - 1,741 contributions

The interest rate on an investment is going to be higher than that on a primary residence. Have you already refinanced your primary residence to take advantage of the lowest rate possible? Feel free to give our California lending experts a call to chat about your situation at no obligation and determine what would be the best financial decision for you - 858-605-0952.

Apr 23rd 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

Yes, for reasons already posted.

Apr 23rd 2013
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Carlos Figueira (carlosfigueira)
#108 ranked lender in New Jersey - 198 contributions

Yes BUT everyones financial situation is different, CONSULT with your accountant 1st so that he can properly inform you of the pros and cons

Apr 23rd 2013
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Peter Savino (855411LEND)
#100 ranked lender in New Jersey - 332 contributions

Check with your CPA, but I would say no.

Apr 23rd 2013
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Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#77 ranked lender in Florida - 2,240 contributions

Se answer in previous post!

Apr 23rd 2013
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Carlo Sanchez (MortgageLendingPro)
#0 ranked lender in Utah - 1,163 contributions

Check CPA and other posts on this matter. Also keep in mind that a rental property rate is generally higher with an investment property.

Apr 23rd 2013
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Joe Shamie (Joe Shamie)
#4 ranked lender in New Jersey - 1,412 contributions

William's answer is probably the best advice

Apr 23rd 2013
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Blake Kleckner (BlakeK)
#388 ranked lender in California - 258 contributions

Much of this answer depends upon the specifics about your residence and rental mortgage loans, as well as your level of eligibility for the cash out refinance of the rental property. One of the most important factors to take into consideration is the interest rate (IR) that you can get on the rental property loan as it compares to that of the IR on your residence loan. With IRs at historical lows, you might be pleasantly surprised at what the rental property IR could be. Even thought it may be higher than the IR available for a residence mortgage, it may be considerably less than the IR on your home, especially if it is in the jumbo loan category. While IRs for rental properties are higher than those for residences, the difference may not be as great as you may think, particularly if the rental property has a loan balance of $625,500 or less, and the loan for your residence is a jumbo with a jumbo IR. Even it it is not, your residence IR could be significantly more than the IR you could get on the refinance of your rental property. Two other factors of great importance are your FICO score and the loan-to-value ratio of the rental property prior to the loan being consummated. They will directly affect the IR and cost of your loan. Without some additional information, it's not possible to advise you whether or not what you have in mind will be advantageous for you in the long run. I am an accountant by education. As such, I should be able to assess your mortgage situation quite accurately, saving you valuable time in your research. If you send me what you believe to be is the FMV of your paid off rental property, the balance of your current residence loan and amount when it was originated, its IR and monthly principal and interest payment, and your FICO score; I will tell you precisely what can be done assuming you can qualify for the new loan based upon lender guidelines, and your rental property FMV estimate is relatively accurate. Give me a call 16/7, or email me your phone number so I can call you, and I'll be happy to discuss your options with you. To learn more about me and our mortgage brokerage, click on my picture. When the next page pops up, click on "Website" and you will be redirected to ours. We work exclusively in CA and get loans done fast, normally in less than 30 days, at low interest rates and costs. Representing 40+ quality lenders that offer more than 1,000 loan programs, we definitely have something for everybody.

Apr 23rd 2013
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Samantha Taylor (samantha)
#365 ranked lender in California - 29 contributions

If you can afford to the pay the closing costs and other associated fees for the refinance, then you may go ahead with the deal. If you refinance your rental property to pay off your primary home, then it will help you make your primary home free and clear. Thus, it will become a safe asset for you. Thanks,Samantha

Apr 25th 2013
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