Deciding between two HELOC options

5 Replies

Hi, I'm just starting out in RE investing (BRRR, specifically) and am preparing ready sources for cash. I have $125K in equity in my primary residence that I'm trying to leverage. I've narrowed down my focus to two specific options:

1. $125K line of credit:  7-yr fixed rate (4.99%), with a 2-yr draw period

2. $58K 40-yr variable rate (currently 4.99%), with a 20-yr draw period

The 40/20 is much more flexible, but can only go to 80% of LTV and I doubt that I can buy and rehab on $58K, without coupling with hard money or other sources. The 7-yr provides lots of headroom (ie. can tap the full 100% of my equity), but being new and still building and tweaking my Core 4, I'm concerned that I won't get a lot done in 2 yrs, when the draw period closes.

Any helpful thoughts out there, for getting started on the right foot?  Thx in advance!  - Dave

Tower FCU will go to 100% on your primary. They are others that will go to 95%. Keep in mind this is all possible if it's your primary home which you indicated it is. Tower FCU 100% CLTV is prime plus 1.25% last I checked and it is 15 year draw/IO period.

Paul, I appreciate the response.  I've already been through the appraisal (no fee) and am approved and ready to close.  Unsure what to expect starting from scratch (fees and time), being in Virginia with Tower FCU in Maryland.  Thoughts?

@Dave Row

Going through tower now. I’m in Oregon. They’re slow and require a lot of paper work that they seem to just make up but it is what it is.

Example... I enlisted in the guard this year but they needed tax returns from 2018 for the guard or same thing with my job I’ve been at for two years they wanted pay stubs from three years ago. They are doing 95% ltv on my primary so it’ll be about 85k I’ll have to “play” with which is nice but it’s also been in the process for three months now.

Originally posted by @Craig Jeppesen :

I would look for a place with a 10 or 20 year draw period or you will have to refinance in 2 years. You need more than $58 k to brrrr.

Yeah, I feel the same way.  I've been champing at the bit to go, but know that I want to get this (and my corporate structures) right.  It's funny, but the BiggerPockets podcasts keep droning, "go, go, go!  Make a move!  Just do *something*!," and I'm not prone to analysis paralysis, but it seems pretty short-sighted to leap before getting stuff like this right Day 1.  The waiting is killing me!  :)