How best to use “dead” equity

[Samir S.]

I’m looking for some advice on what the best strategy is for using “dead” equity in my homes. I have a primary residence on a 30-year fixed at 3.25% with $405K remaining to pay down. I have, very conservatively, $250K equity in this house based on recent comps. I am reluctant to refinance this home because 1) my rate is great, and 2) if I cash out more than $19.5K I will be bumped out of the conforming loan bracket, resulting in a higher mortgage rate as well. My rental property is on a 30-year fixed at 3.875% with roughly $294K left to pay down. I have roughly $175K equity in this house, based on recent comps. My strategy is long term buy and hold. I don’t mind if my cash flow each month is break even or even slightly negative as I believe that appreciation will make up for that. My wife and I have stable careers that pay well and we can weather a dip in RE. I know that I can do something with the equity in these homes, I’m just not sure how best to go about it, which is why I’d like to hear your advice. Cash out refinance? HELOC? Anything else I’m not thinking of? Thanks for reading...

[Jennifer Beadles]

@Samir S. I found it very easy to get HELOC's on my rental properties. Have you talked to smaller banks? I wouldn't bother with credit unions or big banks (BOA, Wells, Chase). The bank I use has about 10 branches and is well capitalized, they lend at 70 LTV for a second position HELOC. They ordered a drive by BPO (broker price opinion) and we closed the HELOC in 7 days.

I would call around and I bet you'll find a bank that will do it.