Cash-Out Refi & HELOC on the Same Property (does order matter?)

5 Replies

Hi all,

When taking out a cash-out refi and HELOC on the same property, does the order in which you take them out matter? I'd like to get a cash-out refi on my primary residence given mortgage rates continue to be low, and a 90 LTV HELOC on the same property to be able to use as-needed for investments. I assume since the HELOC is in 2nd lien position it would be better to get the cash-out refi first since that would affect the LTV calculations for the HELOC. Otherwise it might cause some headaches with the HELOC lender..

You will most likely need to do the refi first then HELOC second. If you do it the other way around the HELOC ends up being in 1st position so it would probably be more of a hassle to move them to 2nd, or the new lender might make you pay it off and do it all over again.

Have you considered just a larger HELOC? The interest rate might not be quite as attractive, but closing costs are MUCH less and you'll only be paying interest on the money you're using.

Of course, it depends on how you're planning on using the cash... but I'd probably just do a HELOC, especially with interest rates planned to stay low for a while.

@Max T. - I have about $700-800K equity in the property, and the cash-out refi would be for $250K or so

@Mike McCarthy - that would be an option for sure. But it's hard(er) to get HELOC for ~$500K. And also I have $250K of capex for additions to the same property so would be good to get that on a fixed rate, 30 year term, and tap the rest of the equity on a revolving basis for short-term BRRRRs on other properties.

Thanks all for the feedback!