Home equity loan for $149,000 at a 9.8% rate

[Brenden Sperl]

I just received a quote for $149,000 of equity at a 9.8% rate in order to purchase another rental property. Is this a high rate? Does is still beat "not paying taxes on your equity by selling"? And is there more competitive rates with other companies that you guys may know of that I don't. Please reach out to me, thanks.

[Patrick Roberts]

I'm assuming this a second position loan against the equity in your primary home. If so, then most lenders are at WSJ Prime + a spread on these types of loans right now. Whether this is a line of credit vs a closed-end loan, the tenor of the loan, your FICO, and the CLTV on the property will all impact your rate. 9.8% is probably a little high, but if your FICO is below 700, then this is likely on target.

For reference, WSJ Prime is 7.5% as of this morning. 

If this is first position and the property is currently free and clear, you'll be much better off with cashout refinance.