cash out refi vs heloc on a Brrrr??

6 Replies

Can I ask Why a cash out refi is better than a Heloc when u can pull out up to a 100% on some Helocs and a cash out only gets u 75%. Please lmk what the benefit of the cash out is over the Heloc since u can still pay ur hard money back and do all the same things. Thanks 

@Bobby Forsythe A HELOC can be more advantageous if you don't already have a deal to put the capital to. The interest rates are typically a little higher and have a limited withdrawal period.

A cash out refinance will typically have a lower interest rate, but you must start making payments right away, so it is better if you already have a plan for using the capital.

You can't really go wrong either way, but some planning on how you plan to use the funds may help determine which way you go.

Best of luck!

@Bobby Forsythe many helocs are also interest only. So once you take the money you need, pay interest only until your refi. This fits much better for BRRRRR.

With cash out refi, you pay mortage on loan every month. The extra money is getting paid for 15-30 years and not that flexible. But you never have to “pay back” the borrowed money so have more options to leave the money in the deal.

key takeaway: 

Heloc typically have higher interests and a limited withdrawal period but is preferred if you dont have immediate use for funds while cash out refi the interests are usually lower but you start making payments immediately so you need to have a plan to use funds right away. many helocs are also interest only. So once you take the money you need, pay interest only until your refi. This fits much better for BRRRRR. With cash out refi you never have to “pay back” the borrowed money so have more options to leave the money in the deal and not worry about higher interest.