Updated almost 9 years ago on . Most recent reply
HELOC: 90K or Cash out VA Refi ?
Just looking to get some opinions/advice on the options below. Cash out VA Refi for lower rate and cash up front? HELOC with higher interest and different term? Keep in mind I am not 100 percent set on living in my current house forever or even for another year or two if the right job opportunity requires me to move. The VA refi seems a little more risky as it's using all of my equity. Okay enough of my thoughts for now because I don't want to persuade one way or another. Below are my options for now.
You can do an equity loan like we first talked about….which would provide the down payment for your new property. Then you would either need to pay cash for the remainder of the purchase, or get a new loan to finance that property. I am not sure what price range you are looking for….so if you can let me know that…I can put together an estimate for the investment property loan should you need one.
I see that you have a VA loan against your current home now. The VA allows you to do a cash out refinance on your home to get cash for purposes such as this should you choose. You could do a refinance at a current rate of 3.875%, for a loan up to $424,000 and your principal and interest payment would be $1993.81. You would net roughly $150,000 in cash from this transaction.
You are pre-qualified for all of the scenarios I have outlined…below is a spreadsheet for you to compare options:
| Program | Equity Line of Credit $90K | Equity Line of Credit $130K | VA Refinance |
| Total owed against your home | $360,000 | $400,000 | $424,000 |
| Rate | 4.75% | 5.75% | 3.875% Fixed |
| Term | Interest only for 10 years then amortized for 15 years | Interest only for 10 years then amortized for 15 years | Fixed for 30 years |
| Closing costs and pre-paid items for closing | $1000 | $1200 | $4900 |
| Net cash proceeds available after covering closing costs | $89,000 | $128,800 | $149,100 |
| Monthly payment | $357 + first mortgage $1802 = Total monthly payment is $2159 | $623 + first mortgage $1802 = Total monthly payment is $2425 | $2370 PITI first mortgage only |
Please let me know what price range of investment property you are considering and if you will need a loan on the investment property as well….and I can run figures for you.