Cash out refi on personal home to buy more rentals?

[Sandro DeAngelis]

Hello everyone,

I am looking for some advice and was wondering how you would handle this.

I currently have my personal residence at a 3.625% interest rate and I locked into this rate about 2 years ago.  I have a great chunk of equity I would like to cash out refinance to buy another rental property.  Unfortunately, the cash out refinance rate would be 4.25%.

I also put down an extra $200 on my mortgage to pay the primary house off and will have it paid off in 20 years.

My house payment would go up about $125 as I would "pretend $200" was still part of my payment, but to me that is not what I am concerned about.  

What I am worried about is the amount of interest I would pay doing a new loan and higher loan.

Would you personally buy a rental with this money knowing it may cost you an additional $100,000 or so in interest over the 30 years?  

There's a side of me that says it is worth it because in 30 years that house is paid free and clear and you cash flow let's say $2000 a month.

There's another side of me that says don't do it and have your personal home paid off in 20 years and save the interest and use that huge amount of equity to downsize and use in other ways.

Any advice would be greatly appreciated!

Thanks