Time to move some equity?

3 Replies

The market has had a nice little run since my last re-fi, and I want to investigate moving my new equity to more higher ROI. Of course I really don't want to touch the low rates I already have. Are second mortgages worth looking at? HELOC variable rates scare me a bit as rates are going up over the long term. Then again you don't start paying on a HELOC until you use the money, unlike a second mortgage.

Here are the numbers:

Primary Residence - Denver Sunnyside Neighborhood

Last appraisal: $315K in spring of 2013

Worth?: $365K

Mortgage Balance: $242K

PITI: $1,494.70, P= $430.75, I= $657.27, P&I= $1088.02, Escrow= $406.68

Rate: 3.25%

Updates: About $25k-$30K of improvements since $315K refi.

Aprox HELOC Available: $50K ($365K * .80 - $242K)

Investment Property - Denver Cole Neighborhood

Purchase: $220K December 2012

Worth?: $280K

Mortgage Balance: $160K

PITI: $1,007.10, P= $257.60, I= $518.29, P&I= $775.89, Escrow= $231.21

Rate: 3.875%

Aprox HELOC Available: $50K ($280K * .75 - $160K)

Current Wells Fargo HELOC rates (20 year)

Line of Credit 3 year fixed rate 4.375%

Line of Credit 5 year fixed rate 6.99%

So as long as I can invest the proceeds of any HELOC/Second a few percentage points higher than borrowing costs, it's worth getting the HELOC/Second?

Thoughts? Advice?

You might want to consider looking at a small bank or credit union for the HELOC. The rates are usually lower. We got ours at an introductory 12 month rate of 1.99%, after that it goes up to 3.85%. Also, they use a 90% LTV and waived all fees and costs. If you do some google searching you can find who currently has promotions going on. Best of luck.

@Jim Tiernan  - don't forget to consider your cash flow. Make sure all your expenses are covered after you take the cash out. It's easy to get into a negative cash flow situation when these high value and relatively low rent properties get more leverage.

thanks @Jake Silcott  and @Bill S.

I've heard HELOC money can't be used for down payments for single family?

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