VA Home loan Refi

[Rich Cavanagh]

I'm a veteran and buy and hold landlord looking for a creative way to take advantage of the VA Home loan I have access to. I'm looking to speed up acquisition of a 2nd rental OR at the very least save some monthly costs (if combining the 2 mortgages saves me enough to make it worth it).

I have equity in my primary residence equal to about what I owe on my rental. Would it make sense to refinance my primary to appraisal then pay off the rental? or... Should I look into possibly refinancing for a down payment on another rental property?

Any thoughts on these or any other ways to play it that I haven't thought of?

[Michael R.]

Hi Rich Cavanagh

Refinancing for a down payment when you have access to a VA Loan (i.e. 100% Financing)? Confused as to what your strategy is.

Refinancing costs money -- and while you may be in the house long enough to make it worth it (i.e. lower interest rate * # of Months = closing costs earned back), the money that you use to refinance could be used towards closing on a new place with a VA loan. I don't like to refinance for less than 1% improvement on my interest rate and I'm not sure what your current rate is.

So taking any new properties out of the discussion for one second -- does it make financial and business sense to refinance?  You mention equity in your Primary Residence and refinancing that equity to have equity in your rental would. In my opinion, that will just cost you money to transfer your debt and equity from one property to another.  So this so me, unless you are saving a lot of money over the long term and improving the performance of your properties, doesn't make sense financially or business wise.

Again, this makes me wonder what you are trying to achieve.

Right now you've shared that you want to get a second duplex and that you have a VA Loan that you can access.

Is your strategy to acquire an additional property with a little money out of pocket as possible? If so - use your VA Loan, get a multi unit and don't touch your other two properties.

If not, what is your objective because these seem like two different business transactions.

I hope that helps.