What's the best option when pulling money out of property

[Kyle McVay]

We have a property that I'd like to pull money out of, to buy more property,  would I use a Home Equity Loan or is there another better option? I'm trying to make sure I understood what I read, in a BP book. Please forgive the question I know it's probably pretty basic but this is just our 2nd deal so we are still learning. 

 Thanks!

[Jeff Roth]

Hi Kyle in Bryon-College Station, Texas-

Great question!

You have a property and you want to know the best ways to pull money out to buy the next property.

If this is your primary residence, you can do a Home Equity Line of Credit which gives you flexibility on how much you use but a floating interest rate. There is also a Home Equity Loan but that gives you a fixed payment right away on the balance even if you don't need the whole balance but the interest rate is fixed. These are both good options if your interest rate is low on your primary loan. If you don't care about that, you can do a cash out refinance and pull the equity out with a fixed interest rate and payment but the interest rate is usually higher than a non-cash out loan.

If this is an investment property, your options are similar but you can also use a Debt Service Coverage Ratio or DSCR loan and use the income from the property to qualify. Rates are similar to non-DSCR loans.

To Your Success!