Home Equity Loan vs. 15 Yr Mortgage

[Michael Anderson]

Hi all.   Open for feedback here.   I have plenty of equity in my primary residence to fund the purchase of an investment property.   Buy and hold.   Already own two rentals,  this would be our 3rd.   Very much in favor of leverage... Just wondering what the board thinks about home equity loan vs.  15 Yr Mortgage.   FICO in the 800s.   II think iI an do a home equity loan at 4.24% /100 K.   15 Yr Mortgage probably about 3.75%.  Seems like the home equity deal is better... But wondering what it does to me on term... For example we want to buy house #4 next year.   Hope to hear some helpful feedback!   Thanks Mike 

[Steven Woon]

I notice you are from Texas which has a homestead exemption rule which protects your primary residence against most judgement. 

Personally, I prefer to have my primary resident remain fully paid off, and take up as much mortgage as I am qualified for investment properties. This means if TSHTF, I still get to keep the house without any outstanding mortgage or HELOC payments to worry about.

If I ever need to use HELOC or term loan on my otherwise fully paid off primary residence, it will most likely for short term, such as a rehab unit which will eventually be sold or refinance.