Cash-out Refinance or HELOC

2 Replies

Hi, everybody. I am Amy.I and my husband Ray live in Broward County, South Florida. We are thinking purchasing our first rental property within next six to nine months. The price of the homes down here went up a lot in the last four years. We have some cash reserves but we don't feel comfortable to use all that just for the down payment. We also have a HELOC with $40,000. Should we cash out refinance out primary residence to pull more cash out or should we just use own cash reserve+ HELOC for next down payment and any extra fees? Thanks for your help.

Hey Amy and welcome to BP! 

It really depends on how much equity you have in your primary residence.

You could also use the HELOC for down payment and cash reserves for any rehab or maintenance needed.

Then once the property is stable you can cash out refinance to pay your HELOC back and replenish reserves.

With the limited information provided this would be my suggestion.

Hi, Brian. Thanks for your suggestion. We have around $100,000 equity sitting in our primary residence with current market value. But we also have $52,000 mortgage. We just have $20,000 cash reserves.