77abe wrote:

- quote -

Not sure what you mean by "tax free". Loan proceeds are always "tax
free", just as payments on loan principal are never tax deductible.
However the increase in mortgage interest payments you contemplate is
NOT a deductible expense of your rental.

Now to the extent you use the cash-out to earn investment income, the
interest for that amount could be tax-deductible as investment interest
expense. Keep track of the interest on the original mortgage and the
increase separately.

Leaving aside the "tax tail", if the "dog" results in a half-percent
drop in mortgage rate, that's probably good. The answer to your
question really depends on your other sources of funding for a car
purchase and whether you can afford a nice vacation.

-Mark Bole

I have a rental home that no is below $98K [at] 6.0% on the mortgage. The
current market value is $280K.

I though this would be a good time to take out some equity and
refinance at $175K [at] 5.5% , but still giving me a 6 figure equity in
the home and a mortgage+escrow pmt that is still about $150 below the
rental fee.

It seems reasonable to pull out te equity since it is tax free, maybe
take a nice vacation for my wife & I, a vehicle for my daughter and
invest the remaining.

Does this seem to be a reasonable medium of taking out equity but
still keeping the 100K equity in the home. Should I take out more?
Less?

This is the first time I have refinanced this property, so I'm trying
to get some other opinions on what should be a good procedure for
doing this.

Thanks