The theme for Sunday’s show popped up early in this call from Julie, an investor from Illinois questioning the options for her latest investment property. After digging a little, the Insiders discover Julie’s primary residence is free & clear - no mortgage at all! They offer up some wise advice - take the cash out of her primary home to purchase any new investment property. There are several reasons the Insiders recommend this move.

Julie brings up the first obstacle with obtaining a mortgage for the new property – most lenders require a substantial down payment. Investment properties carry significant risk when lending money. This hefty amount of risk also will subject Julie to a higher rate, higher costs and perhaps some required points (pre-paid interest), purely

for the fact that the new property will not be her primary residence. Also, if she doesn’t put at least 20% down, she’s subject to PMI (private mortgage insurance).

Stephen Luigi tells Julie to not address the new property as a single equation. Rather, look at her whole financial picture. Taking money from her primary residence will ensure she secures the lowest rate, cost and payment. By doing this, she’s leveraging her money and investments for a much larger and more secure profit in the long run. After a quick refinance, Julie can take the cash in hand to buy her new investment property. Being a cash buyer could also put her in a better position than another buyer if it comes to a bidding war.