Refi/Cash Out Question

[Matthew Lessard]

Hi All,

I am looking to refi and cash out on an investment property. It has built equity over the years and I would like to use the cash to purchase another rental property. My mortgage broker informed me that since I am refinancing/cashing out on a rental property my interest rate will be higher (about 1%) compared to if I actually lived in the home. 

Is this correct? If so, it may not make sense to cash out if the monthly mortgage payment on my current rental will increase due to the higher interested rate. Is there any way around this?

As always any input is much appreciated.

Thanks!

[Matthew Lessard]

Thank you at @Jon A. and @Chris Mason, this information is very helpful. It is hard to see the value in doing a refi/cash out for a rentl as it almost seems like a penalty. I also thought about doing a 1031 and selling, but I would like to keep the current rental as the cash flow is good. 

The thing that doesn't sit well is I have all this equity sitting there doing nothing. Any advice on how to proceed? I almost think its best to stay where I am and continue to pay down the current mortgage. Although it would be nice to do something with that equity.