Spanish Fork, UT · Member since 2018 · 12 posts · 3 votes
We currently have some equity in our home and want to pull it out to start investing in other real estate. We have looked at the options of a HELOC or just refinancing. Each one with different pros and cons. I have heard that it might be better to get HELOC but also maybe better to go with the refinance. So I'm looking of some input as to what other might think.
Here is some info about both of the options:
HELOC:
$32,000
Viariable int. rate 4.5-18%
10 year withdrawl period
Payment from $50 to potentially $550 at the highest int rate
What are your plans for the proceeds? I think that is a factor that could influence which route to go.
Without knowing that and based on the fixed rate aspect as well as the ability to get more cash I would go with the Refinance. I am sure there are benefits to the HELOC; the obvious being the *potentially* lower monthly payment.
What are your plans for the proceeds? I think that is a factor that could influence which route to go.
Without knowing that and based on the fixed rate aspect as well as the ability to get more cash I would go with the Refinance. I am sure there are benefits to the HELOC; the obvious being the *potentially* lower monthly payment.
We plan to use it as a down payment and rehab costs for a fix and flip most likely since the buy and holds in are area aren’t cash flowing much. Thanks for your input!
You need to look at the costs of refinancing. Some closing costs are going to be high. But if you can a zero-cost loan on a Refinance this is probably you best option.
Depending on the state you are in a HELOC is a full recourse loan which means that if you fail and lose your home, they can go after you for any losses.
Another good source of funds is to have the world’s largest remodel cover the cost for you. What is the world’s largest? Its Home Depot, and they would be willing to give you a credit card with a big line of credit. On my first flip, I got 4 cards with a total of 20K in credit. Also, Credit Karma will give you a list of credit cards you can get and do cash draws.
So, what I'm say is this; if you fail, and acquire a lot of debt, and if you use your home as collateral then you can lose your home.
Get it? Do use your house as a piggy bank. 32k is not a lot of money you can get this on credit cards.....
@Raquel Rigby On my live in I flip used a credit card to pay contractors. I got a deal for a no interest for 12 months for CC with a flooring company, the rest I put on a capital one card, the balance was only there a couple months so I did not pay too much in interest. The down side for you on using a CC is that you are looking for funds as a down payment too. A cash advance is usually going to be very expensive on a CC, something like a home depot card probably does not even do cash advance.
You might want to see what sorts of programs you can get from a lender to finance a flip and rehab, that way you know what sort of down payment you need to bring.