I am stuck on a question. I have a rental property which is paid off and have equity. I am hoping to use that equity as a way to finance my deal. I am unable to decide if I should go for the line of credit or get a fixed loan for 30 years. Please advice....
I would recommend getting the 30 year fixed, and then have a HELOC ready for emergency repairs.
You can go about it either way though, I don't know your specific situation.
Good luck & remember
Don't Forget To Be Awesome
If you get a HELOC then you can use and reuse it as many times as you have it available. Mine is for 10 years, which they will renew afterward.
If you just refinance, I assume that's what you mean when you say "mortgage", then it's that one time to pull out money. There is no reusing the money.
Think of HELOC as a "credit card" that allows you to pull money out of and pay it back, pull money out of, pay it back.
Thanks for the input Daria B. and John Van Uytven. I was personally inclined towards HELOC, but interest rate is a little higher as the property is not owner occupied.
I would say get a fixed 30 for the mortgage for the investment property:
1. gives you stability in payments. Heloc's typically have payments based on the outstanding balance (1.5%) is common. This creates a large payment, and a changing payment
2. rates are LOW right now, lock them in! You can hedge the low rates now against 30 years of future economic unknowns. A heloc will have a variable interest rate, even if you get it now it may not always be useful to you
3. heloc's are harder to get against investment properties than they are against a primary.
Get a 30yr fixed for the investment property and if you have equity in the primary you put a heloc on that.