Heloc, Higher line of credit VS lower interest?

Question

I'm in the market for a Heloc. I want to use the money for a down payment on an investment property.

What's better a higher amount of line of credit or a lower interest rate? I have to apply tomorrow...HELP!!!

Bank 1 - offers 1.99% interest for the first year and then 6%, - loan amount $130K

Bank 2 - offers 3.99% interest for the first year and then 4 to 5% - loan amount $70K

I think higher line of credit is better because I may use it for 2 deals instead of just 1.

Account Closed · Answer

It really depends on the time frame of your deal.

If you are planning to pay back HELOC within 2 years, lets assume you would need 130k for down payment to do the apple to apple comparison and plan to pay back in 2 years.

Bank 1 will cost you 10400 vs Bank 2 will cost you 11700. If you plan to hold longer than that, bank 1 is not an option since end rate is too high.

Anette Lyons-evans · Answer

I only need $70 K for the first deal.

Bank 1 will give me almost twice as much money compared to bank 2. I could use the other $60 on another deal as down payment. I will pay more interest but have more cash available to use.

Heloc, Higher line of credit VS lower interest?

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