All Forum Posts by: Berenice Barrot

I'm assuming HELOAN is a cash out refi (what does HELOAN stand for? Home Equity Line Of....?). 

First, rates actually aren't that high. They're moving closer to the historical average but are still well below it. 

Second, there aren't many market indicators that a crash is coming.

Third, it doesn't make much sense for a bank to turn around and start calling loans due. They can try, but all that will happen is a ton of default. They won't get their cash back, and they'll have a bunch of loans that no one is making payments on. 

I'd go HELOC. If you aren't using it, you won't have a payment. If you do use it and Armageddon really does strike, you sell the asset you bought with the HELOC and pay it off.

A fixed rate 2nd mortgage (HELOAN) will have a higher interest rate (but usually fixed), and will require you to start making a payment on the full balance right away.

A HELOC is going to come with a lower interest rate but a variable rate, and no payment due until you pull the money out.

The choice on which one is 'better' is up to you.

Hi Berenice,

I personally use a HELOC out of my primary residence to invest.

I prefer the HELOC because of the flexibility, if I'm not using it I'm not paying for it. Also being able to just pay it off and reuse it over and over again.

Now, I don't have a huge portfolio but when I was in a similar situation, my bank only offered the refinance option on an investment property and the HELOC was only on your primary residence.
Not saying this is the case for all banks but be sure to confirm that is an option for you.   In my case, I refinanced the investment took the cash and paid off the HELOC and began looking for the next property.