cash out refinancing, should I use interest-only option?

[Alba Cheung]

Hi,  I have 2 rentals in GA with about a total 150K equity. Both rentals have good cash flows, and both loans are in 4% interest range.  Should I refinance them and use the interest-only option? I need cash to reinvest.  Any good leaders that I can use for this kind of loan?  thanks

[Scott E.]

You told us your interest rate but you didn't say your loan amount. Lets assume $250,000 for this example.

A $250,000 loan at 4% comes with a fully amortized payment of $1,193.54 per month.

A $250,000 loan at 8% comes with an interest only payment of $1,666.67 per month.

Moral of the story: Don't ditch that 4% rate.