Home Equity Loan recommendations?

Question

Hi All, I recently refinanced my primary and looking back, I should have taken some cash out while doing so (the refinance closed at 2.625% just over 2 months ago). I've been thinking about taking out a home equity loan to get some capital to invest into a rental property, but I've been finding that the smaller mortgage brokers that I previously worked with do not do home equity loans. I've only reached out to a few, so this might just be an anomaly.

But anyways, can anyone recommend a lender or bank that offers competitively priced home equity loans?

But anyways, can anyone recommend a lender or bank that offers competitively priced home equity loans?

David Liu · Answer

Thanks for the feedback Jason. To clarify, I was actually looking into a fixed-rate-lump-sum home equity loan, not an adjustable HELOC. But from most people I've talked to so far, sounds like a the lump sum home equity loans are not as common as doing a HELOC or refinancing the entire mortgage.

Jason Wray · Answer

David,

You may want to look into doing a cash out refinance because if you take out a HELOC your going to end up with a adjustable rate even if it's an interest only they are still a pain and can have a prepayment penalty.  The rates for cash out are just slightly above what you have now for a 30YR Fixed.  Since COVID HELOCS can be higher priced and the HELOC credit limit is not a guaranteed cash value.  Meaning if anything changes like credit score, late payment, home value, accidental credit issue like over credit card limit high balances, excessive trade lines the institution does a soft pull every month and can decrease or close the HELOC limit.

Based on actual numbers most people end up consolidating the HELOC into their home down the road majority of the time.