Refinance primary home to invest

[Khurram Mirza]

Hi guys, wanted to know some thoughts on raising cash for a down payment for a rental by refinancing my primary residence. This is a strategy that is not discussed often compared to using HELOC. Is it because of tax treatment ? or leveraging issue ?

[Joe Hermanson]

What is your current interest rate? Is it worth the cost of refinancing? In the first 4 years of a typical mortgage payments, you pay the majority of the interest, so you need to make sure it's worth the expense of refinancing. I would really look into a HELOC since it's only a few hundred dollars to get into place and it is simple interest instead of continuously compounded interest. Over all it's much cheaper and you can pay it down/off and use it again, each time it's needed.