The decision to take equity out of my house or not.

12 Replies

Hello BP world,

I wanted to reach out to the community to see if someone could lead me into the right direction. I am getting closer and closer to my first purchase, of a rental property, and i wanted to know some opinions on whether or not i should take equity out of my current home. I don't know the full details about equity, but i will be looking it up very shortly. I have remodeled my current 2 bed 1 bath home and will need an appraiser to come out and see what the new value is, but I'm not sure what the equity would be or how it affects the interest.

If anyone has some tips or opinions I would truly appreciate it!

I guess the first step it to find out how much equity you can take it out. I would go to a bank/mortgage broker and start asking them questions regarding to how much can be taken out. Best wishes!

Yeah, I was thinking the same. I just need to wait until after the holidays now. Thank you for taking the time to respond! Happy Holidays

Heloc's are typically inexpensive, $500-$1k origination, and you don't pay interest till you draw it. Make sure you're including the cost of repaying the heloc in your criteria and you'll be fine. 
I will caution that since it you'll have a lien against one of the "four walls", be certain you can make the payment even if the deal goes sideways. I've used a heloc many times for various reasons. I find it a very useful tool. ymmv. 

Thank you, I will look into it! Thanks for the advice.

I also took out a heloc to purchase rental property. I used a local bank. They’ll send out the appraiser and tell you what they will give you as far as equity. It was a quick process for me.

Does that include the price of the appraisal or is that a seperate cost?

I'm looking into this as well. I'm working on finishing my basement. Added a room and remodeled the rest of it. I'm wondering if they will come inside and actually check it out, or do they just look at it and say it's a 4 bed 2 bath, check out comps, and give a value based on that?

Originally posted by @Andrew Holzbaugh :

I'm looking into this as well. I'm working on finishing my basement. Added a room and remodeled the rest of it. I'm wondering if they will come inside and actually check it out, or do they just look at it and say it's a 4 bed 2 bath, check out comps, and give a value based on that?

 Our hiloc didn't cost a dime. They didn't come to do the appraisal, despite of my statement that we did big renovation. So I guess used comps. It is a fixed rate of 3.99 , 3 years draw period and 10 years Amortization. We didn't use any money yet, waiting for a good deal to come along.

Originally posted by @Lana Lee :
Originally posted by @Andrew Holzbaugh:

I'm looking into this as well. I'm working on finishing my basement. Added a room and remodeled the rest of it. I'm wondering if they will come inside and actually check it out, or do they just look at it and say it's a 4 bed 2 bath, check out comps, and give a value based on that?

 Our hiloc didn't cost a dime. They didn't come to do the appraisal, despite of my statement that we did big renovation. So I guess used comps. It is a fixed rate of 3.99 , 3 years draw period and 10 years Amortization. We didn't use any money yet, waiting for a good deal to come along.

 I was under the assumption that all helocs were a variable rate. Now I'm even more tempted to go this route

Originally posted by @Andrew Holzbaugh :
Originally posted by @Lana Lee:
Originally posted by @Andrew Holzbaugh:

I'm looking into this as well. I'm working on finishing my basement. Added a room and remodeled the rest of it. I'm wondering if they will come inside and actually check it out, or do they just look at it and say it's a 4 bed 2 bath, check out comps, and give a value based on that?

 Our hiloc didn't cost a dime. They didn't come to do the appraisal, despite of my statement that we did big renovation. So I guess used comps. It is a fixed rate of 3.99 , 3 years draw period and 10 years Amortization. We didn't use any money yet, waiting for a good deal to come along.

 I was under the assumption that all helocs were a variable rate. Now I'm even more tempted to go this route

Shop around. But if the lander asks you the purpose of the HELOC just say primary house renovation or something like that. We got rejected ones because states we want to use it for investment purposes. That was the lesson and next time we just said renovation.

Awesome, I will keep that in mind!

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