Rental Property Investor · Baton Rouge, LA · Member since 2018 · 151 posts · 13 votes
So I am trying to figure out what I should do. I have a condo that I purchased cash for 71k. It’s been fully rented out no issues. Now it’s worth around 95-98k. I would like to keep the rental property as it’s a good rental. But I also need the money to buy another house.
I don’t know if I can get a home equity loan on it, or if I can refinance. To be honest I don’t know the difference. What can I do to get the money out of the condo (take a loan on the condo, while keeping the condo)?
HELOC (Home Equity Line Of Credit) and home equity loans keep the existing loan in place and allow you to use the equity in the property. You can get these at 75%-100% ARV depending on the lender and what your DTI is.
Refinancing is getting a new loan on the property with new terms. Cash out refinancing give you money back. You're still cashing out on the equity, just with a new loan and new interest rate. If you're house is worth 300k and you owe 100k, they'd do a new loan for 75%-80% of the current value of the home and give you the difference between that number and what you owe.
HELOC's are nice as you don't pay anything monthly until you pull the money out. HELoans will charge you as soon as the loan has been funded regardless if you use the funds or not.