2 points investment refi, or 0 points?

[Jesse Wolf]

I am refinancing my current investment property in Olympia, WA. Current rate is 4.125.

I have two options I've narrowed it down to:

2.375 paying two points ($6,500)

or 3.125 with a $4,100 credit

My logic is it would be smarter to go for the 2.375 as not only will my cashflow then be higher, but I'd be financing that $6,500 at 2.375 by rolling it into the loan. The cash flow money I'd make/reinvest would make more, and my day to day situation better.

The downside I see would be doing a cash out refi to pull money for other projects in the future, and the points being wasted. 

I'm open to all sides of criticism/viewpoints.

[Chris Mason]

You're borrowing at an interest rate that starts with a 2. That's about as close to free money as you can get. To play devil's advocate, 2 big arguments against:

- What if rates (somehow) manage to go even lower? You'd be kicking yourself that you bought that rate down, if you then went to sell, or refi again. 

- What if you did sell soon? Your net proceeds will be reduced by the points you financed.