Offer your thoughts or opinion on the input financial query or topic using your financial background.

Investment property refinance following a low appraisal?
Definitely don't borrow from your 401K.  If you quit or get laid off, you have to repay the whole amount back immediately, plus you are borrowing from your opportunity cost.  The stock market should be good at least through the end of this year.   As one of the commentators already stated, have you calculated your net savings by reducing the interest rate?  You will be paying closing costs and not all of these are deductible (only the points are).  When calculating the savings, you have to ask yourself how long you will be hanging on the property?  Are you likely to be long term landlords, or do you have any ideas on selling in the near future?   You can reduce the cost and principal by throwing the equivalent of one to two extra mortgage payments a year to get the repayment period down significantly (by years).  In this way, you are not married to a higher payment (as you would be if you refinanced to a 15 year term).   I would tend to go with a) eat the appraisal cost, not refinance, and b) throw extra money towards principal to get the term of the loan to be reduced.