FEL or HELOC (Newbie lining up Finances before property)
Hi there,
Based on the newbie introduction - others wisely recommended that I line up my finances before property. So, I have one rental which previously had been my primary residence.
I have been in contact with Navy Federal Credit Union who will allow HELOC or Fixed Equity Loan (FEL) upto 70% on the property. This will provide me the adequate capital for another rental property.
Based on my understanding, the key difference between Heloc or FEL is that with FEL it's a fixed interest rate on amount withdrawn whereas HELOC you have option to draw down as necessary but it's variable interest rate. If I am using the funds for downpayment, I think a FEL would be better since the rate would be fixed. Would you agree or am I missing something? Should I consider HELOC instead?
Thank you in advance!
Matthew