How Investors Are Pulling Equity Without Refinancing Their Low Rates

Question

A huge trend I’m seeing right now:

Investors don’t want to lose their 3–4% rates.

So instead of refinancing, more people are exploring:

• HELOCs
• second-position loans
• cross-collateral options
• delayed financing

Protecting low-rate debt has become a strategy by itself.

How are you unlocking equity right now?

Bryan Maddex · Answer

Yes, 2nds and helocs can be great options but too many people get stuck with trying to save a low interest rate 1st mortgage. You should always do a "blended rate calculator" to see what your 1st and 2nd mortgage are actually costing you. Way too often i see someone have a low balance 3% mortgage and want to pull out a large amount of cash. The blended rate can be way higher than just doing a cashout refinance. Good news, this is a simple math equation. I do not want to kill off those low rate 1sts but we sometimes are emotionally attached to them and fail to do math to see what math says you should do. Never a universal answer.

Mike Grudzien · Answer

How now?

• HELOCs
• second-position loans
• cross-collateral options
• delayed financing

You said it.

Doug Smith · Answer

Seeing it too. We've got multiple cash-out 2nds in the pipeline right now. Lots of people pulling equity out. We're seeing the same thing.