Question: Hello all,

Hopefully some of you experts can answer my questions.

I am planning to rent out my first house (which I have lots of equity) and purchase a second home.

My questions are:

1) If I refinance my first home mortgage at a lower interest rate and lower payments, how will that affect my FICO score since I am applying for a new home loan for the second house? Will the FICO score be better since the monthly payments are lower? Or should I refinance later after getting the new home loan.

2) What are your opinions on refinancing the first house with a higher amount to use part of it as a downpayment on the second home?

Thanks in advance,

Answer: I don’t think you’ll get a lower rate on something you’re renting. Check the mortgage carefully, some don’t allow it and you need to make it clear what you’re trying to do upfront. Unless you just love people enough to want to rent, why not sell your furst house and get your butt out of the debt? Probably will get you an even higher mortgage rate on the first house.

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