All
Members
Companies
Blog
Forums
Podcast
Webinars
    User Log in  /  Sign up
  • Forums
    Newest Posts Trending Discussions Followed Forums Real Estate News & Current Events General Landlording & Rental Properties Buying & Selling Real Estate Deal Analysis See All
  • Education

    Read

    BiggerPockets Blog BPInsights: Expert Analysis Guides Glossary Reviews Member Blogs

    Watch

    Webinars Video Library Financial Independence Blueprint Intro to Real Estate: Rentals

    Listen

    BiggerPockets Real Estate Podcast BiggerPockets Money Podcast BiggerPockets Business Podcast Real Estate Rookie Podcast Daily Podcast (Audio Blog)

    Topics

    Business Operations Finance Finding Deals Property Management Property Types Strategy
  • Network

    Recommended Vendors

    Real Estate Agents Mortgage Lenders Companies Hard Money Lenders Contractors Investment Companies

    Search

    Members Events Jobs
  • Tools

    Calculators

    Rental Property Fix and Flip BRRRR Rehab Estimator
    Wholesaling Mortgage Payment 70% Rule Airbnb

    Services

    BPInsights: Property Insights Tenant Screening Property Management Lease Agreement Packages

    New Feature

    BPInsights (beta)

    Quickly analyze a property address or ZIP Code to compare your rent in your neighborhood.

    Analyze a property
  • Find Deals
    Real Estate Listings Find Foreclosures External Link Ads, Jobs, and Other
  • Bookstore

    Real Estate Books

    Profit Like The Pros Bidding to Buy See all books

    Featured Book

    BiggerPockets Wealth Magazine book cover
    BiggerPockets Wealth Magazine

    Written by financial journalists and data scientists, get 60+ pages of newsworthy content, expert-driven advice, and data-backed research written in a clear way to help you navigate your tough investment decisions in an ever-changing financial climate! Subscribe today and get the Oct/Nov issue delivered to your door!

    Get the Magazine
  • Pricing
Log In Sign up
User
Quick search links
Podcast Hard Money Lenders Books Washington
ForumsArrowBuying & Selling Real Estate DiscussionArrowrefi or heloc /analysis paralysis
  • Newest Posts
    • Newest Posts
    • Unanswered Discussions
  • Trending
    • Top Discussions
    • Trending Discussions
  • Browse Forums
Search Nova
Create post

refi or heloc /analysis paralysis

15 Replies

  • Share on Facebook
  • Share on Twitter
  • Share on LinkedIn
Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 3

Brenda Maddox

posted 9 days ago

Hi Everyone,

I am in Analysis Paralysis phase... I have a home with some great equity in it. I could get a Heloc right now with a low interest rate and get 170,000 out so I can invest in other things. Alternatively, I could refinance for a 30 year and get the money out. Which would you do and why? Thanks for your help.

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Analyze Deals and Team
  • Posts 83
  • Votes 33

Justin Phillips
Lender from Phoenix, AZ

replied 9 days ago

@Brenda Maddox It really depends on your goals. If you're looking to get the property paid off, while retaining access to equity, HELOC is the way to go. If you don't want the property paid off, then the cash-out ReFi is the best option.
I recently opened a specialized 1st position Heloc on my property, and I liked it so much that I left my job in Medical sales to work for a company that specializes in them! It allows me to aggressively pay down my principle balance, saving interest cost, but I can access my equity any time. Among other benefits, it features a 30 year draw period, rather than the typical 10 for most Helocs. 

Rotate Log in or sign up to reply
user profile avatar
  • Posts 23
  • Votes 9

Michael Metzger
Financial Advisor from Salt Lake City, UT

replied 9 days ago

@Brenda Maddox It depends on the current mortgage interest rate and whether or not we are talking about a primary home? If its a primary and you wouldn't save much in the refi, I might consider the HELOC. If you are talking about a rental property, then you might consider a refi- if your rate gets cut quite a bit. Any other thoughts from people out there?

Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 3

Brenda Maddox

replied 9 days ago

@Justin Phillips Ok what I want to do is get cash out so I could maybe get a foreclosure on the court house steps and maybe flip a few homes? Debating between doing a few flips vs find a home fix it up and rent it out. Right now everything I look at has a ton of offers on it and most of them have cash. Also, if I do the Heloc then that is likely to affect my debt to income ratio so I don't want the Heloc getting in the way of me buying another home. Thanks for your help.

@Michael Metzger It is my primary home and I have a 2.62 rate on it and it was a 15 year mortgage, I think I have 8 or 9 years and it will be paid off. I want to try to used cash to buy and fix up other properties. I mostly want to buy and hold in really nice neighborhoods but it is difficult to be competitive with these cash buyers. I also need to move really quickly next time I see one and have done the calcs and know it might also cashflow. I just don't know how to get started, I am thinking it's analysis paralysis and it might be time to take action. There are so many great ideas, cash flow a property vs solid equity property in a class a neighborhood vs flip a couple to get some cash. Thanks for responding, I appreciate it.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 4
  • Votes 4

Justin Sherrock
Investor from Philadelphia, PA

replied 9 days ago

@Brenda Maddox Given the current environment with historically low interest rates, but inflation looming, I would definitely refinance over doing a HELOC. You are going to lock in at an interest rate that literally can't get any lower versus a HELOC that is going to likely have a floating interest rate. If rates go up in 12-18 months you will be faced with higher payments and likely have to refi in a higher rate environment. Inflation is real risk, lock the cheap money in while it lasts!!

Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 3

Brenda Maddox

replied 9 days ago

@Justin Sherrock Ok thanks for your perspective on it, what would you do with 170,000 of cash right now? 

Rotate Log in or sign up to reply
user profile avatar
  • Posts 4
  • Votes 4

Justin Sherrock
Investor from Philadelphia, PA

replied 9 days ago

@Brenda Maddox It's such a seller's market right now, I am not super excited to buy more property at current prices, so unless you are really good at finding gems I would be patient. I like real estate notes and/or note funds that provide short duration loans with a first lien security and pay a 6%-10% current dividend. With typical LTV's at 65%-85%, worst case scenario in a default you own the property at a much better entry point. Best case scenario, you refi out of your current property at 3%-5% and you create a nice little interest rate arbitrage while you wait for a better buyer's market.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 3

Brenda Maddox

replied 9 days ago

Yes for sure it is a sellers market, I can't believe the amount of offers I see going into these beat up properties, even the expensive ones. I am good at digging through and finding the gems but just can't compete with the cash people.  Thanks for the advice!

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Analyze Deals and Team
  • Posts 83
  • Votes 33

Justin Phillips
Lender from Phoenix, AZ

replied 9 days ago

@Justin Sherrock Definitely raises a good point. It's really up to your goals, and how you want to get there. If you're not looking to get anything paid down to zero, now is a great time to pull cash out and pay a low rate on a 30 year amm. loan. 

My wife and I are paying down our first position Heloc, to save interest, but also to increase our reserves to pull from. When a deal comes up, we'll simply write a check off our line to purchase in cash. The idea is that we'll finance the majority of our deals going forward ourselves. The credit line used does affect DTI, so that's something to keep in mind too. Based on your equity position that may, or may not be a big factor.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 14
  • Votes 3

Brenda Maddox

replied 9 days ago

@Justin Phillips Ok Great info thanks, what did you end up using your Heloc for the first time? An investment? Did you learn any lessons in hind site about using one? 

Rotate Log in or sign up to reply
  • 1
  • 2
Related Resources Buying & Selling Real Estate Discussion
Home Purchase Fall Through? Don’t Panic: Here’s How to Get Your Earnest Money Back
What Is Underwriting? Here’s What to Expect
8 Reasons Smart Investors Get Their Real Estate License
Understanding Real Estate Commissions (And How to Negotiate Them!)
Investors: Don’t Negotiate Until You Know the Home’s Condition
Resources Read, see, and learn more!
Link Real Estate Investment Calculators
Link BiggerPockets Blog
Link Path to Purchase
Link Mortgage Loans
Link Find a Contractor
Link Real Estate Agents
Link Hard Money Lenders
Link Real Estate Listings

Top Contributors

Jay Hinrichs
Jay Hinrichs
Lake Oswego OR Summerlin, NV
9.46
Score
Tri Le
Tri Le
Cincinnati, OH
5.61
Score
Jonathan Greene
Jonathan Greene
Montclair, NJ
4.51
Score
Brandon Sturgill
Brandon Sturgill
Columbus, OH
4.37
Score
Remington Lyman
Remington Lyman
Columbus, OH
4.05
Score

Buying & Selling Real Estate Discussion Trending Discussions

  • How is inventory in your market?
    39 Replies
  • Do you pay capitol gains tax on owner occupied duplex at sale?
    5 Replies
  • brokers and investor realtors in Ohio
    14 Replies
  • Cheaper Homes or faster market?
    10 Replies
  • OK to use novice real estate agent?
    4 Replies
Log in Sign up

Log in

Forgot password?

If you signed up for BiggerPockets via Facebook, you can log in with just one click!

Log in with Facebook

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Let's get started

We just need a few details to get you set up and ready to go!

Use your real name

Use at least 8 characters. Using a phrase of random words (like: paper Dog team blue) is secure and easy to remember.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Why create an account?

Receive a free digital download of The Ultimate Beginner's Guide to Real Estate Investing.

Connect with 1,000,000+ real estate investors!

Find local real estate meetups and events in your area.

Start analyzing real estate properties, we do the math for you.

It's free!

Explore

  • Membership
  • Community
  • Education
  • Marketplace
  • Tools
  • FilePlace
  • REI Resources
  • Perks
  • Glossary
  • Reviews
  • iOS App
  • Android App

Company

  • About Us
  • Press
  • Advertising
  • Careers
  • Stats
  • Contact Us

Important

  • Editorial Guidelines
  • Terms of Use
  • Rules
  • Privacy
  • FAQ

Social

  • Facebook
  • Twitter
  • YouTube
  • Instagram
© 2004-2021 BiggerPockets, LLC. All Rights Reserved.