Cash out Refi vs HELOC

[John Baker]

Hello everyone. 

I’m currently looking to either cash out refi or get a Heloc on my property that’s fully paid off. I’m looking to get anywhere from 150-160(based on 70%)

I was quoted either 3.25% on a 30 year cash out refi with about 11k in closing costs or a 3.25% Heloc with no closings costs.(I understand that prime rates can change at anytime however I calculated in the 11k savings from not having to pay closing costs)

My plan is to use the money to rehab a property and use my personal money to purchase the property. I am estimating to paying off this loan in 5-6 years. What would be my best option and why?

[Peter M.]

@John Baker Will they let you take a 70% HELOC? Thats pretty good. What you want to do with it after determines your path. Do you want to pay interest for 5-6 years or 30 years? Are you planning to retire in less than 30yrs? If you can take to money from the cash out refi and keep doing deals for 30 years to get a better APR than 3.25% plus the closing costs, do that. But if this is going to be a one and done thing or you aren't sure about the next deal go with the LOC. The good thing about it is that it can just sit there until you are ready to use it and you aren't paying interest on it. If you do the cash out and don't have it working for you then you're losing money. Im partial to the line of credit but that's just me