The process of a HELOC

[Michael Spence]

Hey BP,

I'm truly trying to get a firm grasp on how a HELOC works. My wife and I are currently considering taking one out on the property we live in to purchase our first rental property. The problem is I'm still unsure of how it all comes together. Is there someone whose gone through this process actually lay it out for us? Any pitfalls to look for? Etc.

Thanks BP

[Alex Shaughnessy]

Its like a big credit card. Usually the underwriting process is a bit easier. They will extend a credit from the equity of your home and you can withdrawal as you please, and then put it back whenever. This way you dong have to keep refinancing your house to get cash for deals. It is usually interest only payments for about 10 years to which you need to put the entire principle back. The interest rate is usually variable so sometimes It can get a bit scary. My apologies im a bit scatterbrained this morning but I hope this helps at all.