If I refinance and still need a loan to purchase an investment property, how does that work? Do banks/mortgage companies do that?

If I refinance and still need a loan to purchase an investment property, how does that work? Do banks/mortgage companies do that?
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Would it make more sense to refinance and put that money down, as well as take an additional loan, OR just take a home equity line for the 20%?

We are 63 and 65, semi-retired with $600,000 combined in our 401ks, which we rolled over to an investment broker. Our annual income is still slightly more than $100,000. We would like to invest in a beach condo which we would eventually move to when we sell our house in 3-5 years. We do not have enough for the 20% down. It seems that taking from our invested money will be too costly in terms of taxes. We owe $76,000 on our house which is worth about $360,000.


I agree that you would do well not to touch the 401k's, if possible. You should be able to re-fi or get a home equity loan (or even a Home Equity Line of Credit HELOC) for the downpayment, but you will need to talk to your banker or mortgage lender about that. Of course, your ability to do so will depend upon other factors such as your credit rating and what your current residence appraises for.

With $600k invested with a "broker", have you considered talking to a fee-only financial planner who could not only handle your investments but also work with you on financial planning issues (such as this one) at no extra cost? It may be worth your while to look into the differences. You will be living in 2 separate states, so the location of your advisor should not be an issue.

Good luck and I hope this helps!


This scenario scares me. From the sounds of it, your assets are tied up in retirement accounts and your residence. You apparently do not have much for savings since you indicated you don't have the 20% down payment. If everything goes absolutely right for the next 3-5 years, moving ahead with this plan is ok. But since we cannot guarantee that everything will go right, there are risks involved, including risks that could jeopardize your retirement plan.

All that boils down to the point that you really are not in a position to afford the upkeep of two houses, especially a high maintenance residences at/near the beach. And if disaster struck, you would be left scrambling. You could offset the expenses of the condo by renting, but again that requires everything to go perfectly right. For the next 3-5 years, I just down't see that you have the assets, emergency fund or income to pull this off without something bad happening or your budget getting squeezed somewhere.

I would suggest waiting until you sell your residence before buying the beach condo. Then perhaps you can buy something mortgage-free and take some of the stress off your retirement income.


If you invest your $600,000 successfully between now and age 70- - you should have around $1,000,000, maybe more. This can create about $50,000 of income for you for life. Since you both work, your social security will like be $70,000 a year at age 70. So to match your $100,000 you will need to create $30,000 to match your current income of $100,000. The 401k money should get you there.

The LAST thing I would suggest is increasing the loan on your house. You could be debt free by age 70. You would then not have your monthly house payment. This is a high measure of security. It you borrow against the house, you risk your house and the investment property. I certainly would NOT take anything out of the 401k to do this investment property.

Why take on the risk and the headache. You don't need the income or the management responsibility. Simple is better. BUT - if you want to do this, a refi for what you can afford, pays off the current mortgage - the balance would be available for investment. I would no do a HELOC..

Hope this helps 


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