All Forum Posts by: Dustin Meyer

A home equity loan and a cash out refinance are basically the same thing. The difference is you do a cash out refinance if there is not a current lien on the property and you own it free and clear. Home equity loans are for properties with current liens on them. Either way you can borrow up to 70% -75% of the appraised value of the home. Just subtract whatever % you have in current liens from 70% and that will tell you the potential about you can borrow. Both are essentially just 2nd mortgages at a higher interest rate. You will get 1 lump sum at closing and be expected to start payments the following month. The nice part is there are usually no up front costs at closing. All closing costs are just rolled into the loan and deducted from the amount borrowed. One other thing to be aware of though is Texas has really high closing costs on loans. Expect to pay at least 2 to 3 times what some other states charge.

hi Arun, I live in Houston and had the same problem. we bought a house in 2012 and kept it to rent when we purchased our next house. after calling about 10 banks I was finally told that texas state law does not allow helocs on investment property. A heloc can only be used for an owner occupied property. however you can do a home equity loan for up to 70% of the value of the home. The total of all loans on the property have to be less than 70% in order to do this. alternatively you can do a cash out refinance if you own the home free and clear. it's basically the same thing as a home equity loan. Current rates are about 4.5% interest on these types of investment loans.

the best place I've found for pricing estimates like this is diyornot.com. they break down the material costs and labor by your zip code and provide you with step by step instructions for how to diy a project if you choose to. it doesn't sound like you are interested in that but the costs they provide with labor are pretty close to quotes I've gotten from contractors in the past. the prices are updated fairly regularly too. it's a great place to start to learn costs for a project until you get good enough to estimate them on your own.