I was looking into refinancing because rates were so low right now.

My mortgage broker told me that rates on a duplex are about a point higher then a investment sfh. (seems strange to me but it is what it is) And of course investment SFH is higher then my primary home.

It was suggested that I take cash out of my primary and my SFH investment to pay off duplex to get the lowest rates. I have plenty of equity in all to do this.

But, I have two kids in high school right now. In a few years they will be in college. Equity in my home does not count as an asset for financial aid, equity in a rental does.

Based on current qualification standards and my income kids would qualify for some federal aid - if I have paid off investment property they would not. New president, new tax laws, what is going to change in the next few years?

Should I pay off the primary home instead even though rates will be higher? If no laws change this is the best mathematical answer. Idea of paid off primary is nice. Lowest possible rate makes sense. Not sure how laws will change for tuition aid. Not sure I want to manipulate to qualify for aid.

Perhaps check with 3-4 different banks or credit unions and see what rates they offer. Possibly your mortgage broker is looking to his commissions and not to getting you the very best rates.

You don't claim a cash out refi as income.

Refi on two properties with cash out would pay off all three. So no actual extra debt or cash. Just moving debt around either for better rate or lower net worth on FAFSA since equity in primary home doesn't count toward net worth.

Will your kids qualify for grants via the FAFSA?

If yes, you might think about how to accomplish what you're doing, but it's going to be hard since you're trying to predict the future, and in 2 years college might be "free" if certain D politicians get their way and all your plans may come to nothing.

Just went through this same situation as my oldest is a freshman in college. Basically, you want your equity in your primary because it doesn't hurt you there on the FAFSA. But you also want your debt on the primary because the rates are lowest there (disregarding other asset protection strategies for the sake of argument).

A lot of it also depends on where your kids go to school, which for us was hard to predict. Most public schools only use the FAFSA which DOES NOT count your primary, but most privates also use the CSS, which DOES count your primary.

I ended up using a HELOC on my primary (@2%) to pay off a mortgage on a triplex at @6%. After I did all the math, I basically transferred my debt from one property to another in the time it takes to write a check. In different circumstances, one my want to go the other way.

I think FAFSA counts 5.8% of parental assets as available for college, so you need to calculate if that 5.8% in aid you'll "lose" is worth more or less than what you can do with the money/equity.

SN - It should not be in your name as you are co-mingling other people's funds with yours.

The savings account just contains the security deposit of the rentals, and is not mingled with any other funds. We don't have an LLC or official company name, so the account is in our names.

How is everyone keeping their security deposit? What's the best way to keep it safe?

Also want to avoid entering it in the FAFSA, which I'll be filling out soon for my son.

SN I don't know about what MI law requires but in MA & most other states a SD is actually the tenant's money that the LL is holding in trust for payment towards future obligations of the tenant. MA has very specific laws about how much a SD can be, what paperwork must be give to the tenant, where the SD has to to be held, when the SD must be returned or accounted for, etc. All of these are intended to prevent a LL's creditor from attaching any accounts that the SDs are held in.

Since it doesn't become the LL's until certain legal requirements are met it has to be held in a manner that prevents anyone except the tenant from using it. A security deposit is a deposit of money to the landlord to ensure that rent will be paid and other responsibilities of the lease performed (e.g., paying for damage caused by the tenant). The laws surrounding these deposits vary from state to state.

You might want to verify what MI requires a LL to do with SDs. A quick search revealed the following;

How do you store a tenant's security deposit in Michigan?

In the state of Michigan, a landlord has two options for storing a tenant’s security deposit. Escrow Account- The landlord can choose to place a tenant’s security deposit in an account in a regulated bank or financial institution. Surety Bond- A landlord can post a cash bond or a surety bond for the amount of the tenant's security deposit.

@SN [MI] - i don't think you got a full answer on this, so in case you are still following... you can ask your bank to transfer the funds to an escrow account, one account for each security deposit if you have multiple units.

The escrow account is in the tenant's name so you will need a W9 from the tenant to get their SSN to open the account. You don't need a LLC to do this. You are the authorized account manager; the tenant cannot go and request a withdraw without you.

Some banks let you designate the account with "ID required" for withdraws for extra protection. Tenant gets a statement showing you are protecting their money. Any earned interest is theirs and charged to them for tax purposes.

In some states you can withhold a fee upon termination and distribution; check on your local laws. At the time of termination and distribution, you tell the bank to cut a cashier's check for what is owed back to the tenant (and with draw the balance of what is owed to you for any charges or fees).