We have 2 rentals HM#1- $280k financed its worth $500k. HM#2- is worth $420k & We owe $283k. Im feeling stuck. Which cash access option is the best or would you recommend? Which is the fastest? Downstream.
Hi @Joyce Jackson , There are pros and cons to the options. If you do a cash out refi you'll need to begin paying a higher mortgage on it immediately, but you'll lock in a long term low-interest loan. If you use a HELOC, the interest rate may be a little higher, but you won't have to pay on it until you use it - like a credit card and it acts like cash. For flexibility purposes, I'd lean to a HELOC over the loan options.
Neither refinancing nor HELOC is particularly fast. Both require credit pulls and usually full appraisals...with a possibility of desktop underwriting on some HELOCs. Both are taking a long time due to long queue and underwriting. HELOCs act like credit cards, where you charge up and repay...and affect DTI. They can be called due by lenders in credit crunch situations, or locked where you can no longer draw. They are often interest-only for a set period of time, such as 10 years, and most are variable interest rate.