Cash-Out Refi Question

[Alfred Litton]

Hi Folks,

Need some advice from those of you who have CPA or mortgage experience or just a lot of experience in REI. Two years ago, I took out a personal loan ($50K) to put with some other funds I had to buy a rental property in cash. I've since added to my investments and would like to get rid of that personal loan and thought, since it funded my investment, perhaps I could cash out on one of my properties that's paid off and eliminate that $50K personal loan and even have enough left over ($30K-$40K) to put down on another.

Two Questions:

1.  If I put a mortgage on a paid for property and pay off the personal loan, is that mortgage interest on the new loan deductible even if I used the money to pay off a personal loan?

2. Can I use the remaining funds from the cash out for a down payment on another property (financing it)?

Any help appreciated!

Alfred Litton