Snowball my current 30 mortgages or refi to a new 15 year?

[Russell Fugitt]

I listened to podcast #393 and liked the idea of 15 properties and refinancing one every year to live off the equity.  

I have 3 properties that have significant equity in them.  Going to snowball them and pay them off one at a time.  First one pays off in 21 months increasing cashflow 346/month.  Second one pays off 38 months later increasing cashflow 719/month.  Last one 33 months later to finish the job in 7 years 7 months.  Sounds great, but leaves me to cover vacancies out of my pocket or slow the payoff anytime vacancies or maintenance comes up.

The other option is to refinance all of these 30 year loans that pay off in 22 to 25 years into a 15 year and cash out 250K.  I would pay 5000 per month extra to the loan till my cash was gone.  This finishes the loan in 8 years (5 months later, but with a big chunk of cash in my account for the first couple of years).  

Anyone have an opinion or reason one way is better than the other?  Interest rate on the 15 year would be lower, than the weighted average of the current three loans, but really not much difference in interest paid since the term is so short.

Thanks for the advice.

[David M.]

@Russell Fugitt

Depends on your goals

I figure refinance to get the lower rates. Probably refi to 30 yr loan but pay off like a 15yr. Gives you flexibility in case life throws you a curve ball and run short on cash flow temporarily. Also, helpsnproetect your dti to service more debt as necessary.

Meanwhile, if you are going to cash out refi but pay the loans back at an accelerated pace, why bother cashing out? Why pay to borrow money and pay interest while you have the loan out? That’s just an example of the friction of money.

I believe the idea of the refi is to access the equity to be able to use the funds for something else. Accelerating your payments is a methodology to get you out of debt and enjoy your property free and clear and all the extra cash flow that comes without the debt. Otherwise, it sounds like you are just churning funds every 8 years according to your plan.

I hope this helps. Good luck