Is it a good idea to take out a loan against rental property?

I own a small house in a small town in Minnesota. I have had it rented out for most of the last ten years at $325 a month. Now, I am faced with a large credit card debt and wonder if borrowing against the house (paid for already) and using the money against the card debt is a wise move? I would ofcourse continue to rent the house whenever possible and would use the rent to pay off the loan while using the loan to pay against the credit cards (two of which are over 10% APR)

Is it a good idea to take out a loan against rental property?

That%26#039;s a great idea. Mortgage interest rates are much lower than your credit card interest rates. I would ask for a HELOC (Home Equity Line of Credit) so you use only what you need.

Look at the potential savings:

Credit Card Debt $20,000 @ 19% (20,000x.19= $3,800 per year x 10 years = $38,000interest + $20,000 principle = $58,000)

HELOC: $20,000 @ 6% ($20,000x.06=$1,200.00)

Interest savings $3,800-$12,00 = $3680 savings for that year or $38,000-$1,200 = $36,800 savings over the ten year period)

Is it a good idea to take out a loan against rental property?

it is a great idea to refinance your investment property if you have no loans on it right now. Just one question, you take in $325/month, what bills do you pay?

If you pay no bills on the property and they are the tenants responsibility then you should definately refinance the property with interest rates so low right now, you can use your tenants money to pay your personal debt.

I would advise you to look for a payment in the $200-$225 range to allow yourself for future repairs and renovations/vacancies.

the interest on the loan is also a write off on your taxes, which will save you more money.

Is it a good idea to take out a loan against rental property?

Yes, you can, and should take a loan against the home. Interest rates are minimal right now, and you can right the payment off against your taxes. It is a win /win situation. Just do not let them charge you outrageous fees to get the loan.

Is it a good idea to take out a loan against rental property?

2 things, 1. the rate will be higher than for a personal residence as your rental property is considered non owner occupied, and 2. you will probably only be able to get 70-75% of the value of the property as a loan again because it is non owner occupied, u must have good credit and income to handle your debt structure, and the lender will only allow u to count 70% of the income from the property as they consider the other 30% as a vacancy factor and for repairs. now if all else works for you opps forgot the 70% for income counts only if you can show that you have filed it on your federal income tax, if you havent filed it as part of your income tax you wont be able to count that. now if all that works yes the rate should be substanially lower than credit card rates and stretching it out over 15-30 years should help use up your cash flow , be careful and check throughly ever lender you approach.