Rental Property Investor 路 Atlanta, GA 路 Member since 2020 路 40 posts 路 31 votes
6y
You can do either a cash out refinance or an equity home loan/equity line of credit. Each has their own tradeoffs so research them and compare costs to determine which one is best for you. Once you get the funds use it to make the downpayment on a new property using conventional financing.
Rental Property Investor 路 Atlanta, GA 路 Member since 2020 路 40 posts 路 31 votes
6y
You can do either a cash out refinance or an equity home loan/equity line of credit. Each has their own tradeoffs so research them and compare costs to determine which one is best for you. Once you get the funds use it to make the downpayment on a new property using conventional financing.
Real Estate Agent 路 McAllen, TX 路 Member since 2017 路 382 posts 路 281 votes
6y
If you just want to straight out take equity out but keep the property then you can do a cash out refinance. Keep in mind, this will reset your payment plan back to 30 years and it might cause your monthly payment to go up.
If you are looking for a way to get quick access to money for short periods of time then you should probably get a Home equity line of credit. This works like a credit card so it can be very usefull. For example, you can use this to buy properties in cash, fix them up and then get a mortgage on the new and improved property. Once you take the money out of the new property through getting a mortgage you can repay your Home Equity Line of Credit essentially parking your money again for when you need it again. Home equity line of credits have low interest rates compared to hard money lenders and personal loans.
Option number 3 would be to sell the property but or course, you would have to pay Taxes, realtor fees, closing costs etc etc etc. They can add up to a lot!
Investor 路 Boulder, CO 路 Member since 2016 路 1k+ posts 路 1k+ votes
6y
@Ruben Feletoa as others have said, you can do a cashout refi, HELOC, or sell. Before you do any of these, make sure to nail down your investment strategy and that the current property can carry the new mortgage. If you are going to buy turnkey, I'd do a cashout refi, so you can put downpayments free and clear. If you are going to BRRRR, you could consider the HELOC and use your current property like a bank (just know that any part of the LOC out counts against your DTI so make sure you can qualify). If you are going to flip, then you could consider all 3 options...
Marlton, NJ 路 Member since 2017 路 129 posts 路 16 votes
6y
At 75%ltv you are at 95k cash out, minus closing costs, and other fees you can probably walk away with 88k. Yes, the HELOC is good, but its still a loan, within a loan. If you cashout refi, you take control of that money. Yes, your payments go up, but 95k wont be that significant. Is this a rental, or your primary residence you are discussing? Also, you have to take advantage of the current market swing for a higher appraisal value for the cashout, or the heloc. Next week your prop can drop, and everything changes.
Investor 路 Philadelphia, PA 路 Member since 2014 路 133 posts 路 49 votes
6y
With a HELOC, you will likely be able to tap into more of the equity as you could go up to 90% LTV (or more) depending on the lender. Most lenders do 80% but some do more. Also, with the HELOC, you'll have almost no closing costs vs. cash out refi. Once you buy the investment property with the HELOC, you could do a cash out refi on that investment property and pay down the HELOC. Then repeat the process on a new deal. Interest will only accrue on the outstanding balance, whereas a cash out refi will be more expensive from both a closing cost and interest expense standpoint.
Marlton, NJ 路 Member since 2017 路 129 posts 路 16 votes
6y
For primary, i would go with the Heloc, but be careful, real estate is tricky, and life gets complicated when you're over your head at the place you rest your head.
Real Estate Agent 路 Chicago, IL 路 Member since 2017 路 2k+ posts 路 2k+ votes
6y
Rates are very low right now. I just did a refi on my place. Feel free to PM for a lender but any conventional lender will do. I would recomend shop rates by calling a few local to you. You can pull out up to 75% equity with most some 70% and it will recast the loan back out to 30 years.
I think helocs are great but with rates so low it's a good time to lock in fixed 30 year financing. I also have a HELOC on my place. So you could do something similar pull out a moderate amount of cash on a refi and then have heloc ready if want more in future. (HELOC rates adjust every month so they will go up as rates eventually go up).
Investor 路 NorCal 路 Member since 2015 路 281 posts 路 240 votes
6y
You can also enter all your info at better.com and they do a soft credit check (won鈥檛 affect your score), it will show on their website your mortgage middle score. Good way to get a free FICO score and it will show what you qualify for with your income,debt+Fico. Of course this will vary from lender to lender but it will give you a good starting point.
Rental Property Investor 路 Austin, TX 路 Member since 2016 路 317 posts 路 257 votes
6y
@Jim Spatzenfeld I am also a big fan of better.com and have closed with them. They guarantee to beat whatever offer (loan estimate) you provide them or they will write you a $1000 check plus the closing process was the easiest I have ever been through (my financial situation is complex).
@Jim Spatzenfeld I am also a big fan of better.com and have closed with them. They guarantee to beat whatever offer (loan estimate) you provide them or they will write you a $1000 check plus the closing process was the easiest I have ever been through (my financial situation is complex).
I got a quote from them but they were no where near the most competitive. I showed them another loan estimate and they technically beat it by $100. As someone who wants to have a long-term relationship with my lender, it seems like I鈥檇 have to do a back-and-forth like this with them for all of my loans. It鈥檚 not worth it for $100. I ended up getting an even better deal elsewhere but didn鈥檛 bother coming back to better.com just so they could potentially beat it again by $100.
Rental Property Investor 路 Austin, TX 路 Member since 2016 路 317 posts 路 257 votes
6y
@Jibu V. I go about the negotiation process quite different than you explained. Feel free to send me a direct message and will share my process.
On the relationship aspect, this is business and if someone offers a better deal on a homogeneous product like conforming loans I do not feel bad going another direction. Now if you are talking about portfolio lender, private lender or anyone that can work outside the box of conforming loans....that is an entirely different story.