BRRRR question...... using home equity VS hard money

[Adam Mazzochi]

I️ have hard money and a lot of home equity to use for my BRRR strategy. I️ want to know if my home equity line is going to hinder my refi with the debt to equity ratio. I’m torn between using my home equity or hard money. I️ would like to use the home equity for obvious reasons. Your thoughts please :-) :-) :-)

[Nghi Le]

If you use Home Equity, you can pay it off when you refinance so that it won't affect your DTI. It can probably be arranged at escrow to pay off the HELOC directly with the funds coming from the refinance.

This depends on whether you ran your numbers correctly and you have enough to pay off the HELOC from the refinance. Even if you don't pay it off in full, your DTI should be okay if you pay off most of it. I'd recommend running the numbers with a loan officer first before purchasing the property.

One thing it will affect is your credit score, especially if you over-leverage your HELOC. If it drops low enough, it can affect your ability to refinance the property (or at least your interest rates).