yeah f that. not for that small percentage of equity. That is just what the bank wants you to do. Where is your flexibility in that? Like with a HELOC or LOC? You want more AMORTIZED interest (15 years now) or simple interest? with an accelerated payback plan you want simple.

get a second lien HELOC(should be easily doable on primary residence, some banks just do not like them on NOO, they prefer 1st liens on those) instead or a personal LOC. use that as DP if you do not have cash on hand now. That way you have flexibility/leverage with HELOC and can keep same terms and note now on main mortgage. Once you aggressively repay HELOC for the DP, you can use it to pay off primary residence using velocity banking principles. if you so wish. gives you options. Use simple interest debt to pay off a amortized interest debt with accelerated techniques. I am simply not paying anymore amortized interest than i already have to. I can use a HELOC or LOC and pay off one of my rentals using velocity banking and be done in 1.5 years saving myself over 35k in amortized interest. The simple interest i would pay does not even come close to the amortized interest for obvious reasons even with a higher simple interest rate.

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no, not at all. but i'd have a couple should you want to draw on them for whatever reason. lines of credit give you great leverage and money you can access whereas you cannot access extra money spent paying down principal on a mortgage. If your goal is get mortgages paid off you surely do not want a cash out refi before paying it off or another mortgage once it is paid off to get your hands on some cash. velocity banking using a line of credit is a great strategy. Some lenders do not like second lien position HELOCS. they want first position aka property paid off on NOO rentals.

amortized versus simple interest

LINK

with the HELOC you can use over and over to make more purchases for DP's and aggressively keep paying back down. or finance flips. or do a cash buy and then cash out refi to pull your money back out. You cannot do that with your current strategy of one time cash out refi to pull out enough for a single DP. zero flexibility afterwards being locked in to 2 mortgages albeit nice leverage. what will you do for next property? will you have enough cash on hand then? What flexibility/leverage do you have now? to pull from repeatedly?

now if you feel a HELOC would take too long for you to pay off not making the simple interest worth it AND you intend to pay off primary mortgage soon that can be understandable. then by all means, Lock in your long term rate and roll with it. Whatever is comfortable for you. Especially if you do not plan on buying anymore anytime soon and do not need the flexibility of a HELOC or LOC.

good luck!

This post was edited on 5/14/20 at 12:58 pm