Future loan implications for HELOC

[Nathan Ditoto]

I have been speaking with several lenders and each seems to have a different opinion. My goal is to access the equity I have in my private residence to add to my cash reserves in order to use this money to invest. Selling/renting is not an option I want to consider right now. One lender is suggesting a HELOC so that I can stick with my current healthy mortgage which is 3% and only has 19 years left on the term. The other is saying a cash out refinance is better (current rates ~6%, new 30 year) because it will look better to lenders for future loans based on not having a variable rate and also suggests that appraisals come in lower for HELOCs versus cash out refi, thus lowering the amount of cash I will have access to. I'm leaning towards the HELOC. I know there's a difference between thinking like a homeowner and thinking like an investor but I can't shake the feeling that increasing my mortgage term 11 years, increasing payment almost $400, and essentially wiping out the amount of my payment going towards principle is a bad strategy but I'm hung up on the suggestion that a HELOC will look less desirable to lenders looking at my DTI and cash reserves for future loans. Thoughts?

[Chris Seveney]

@Nathan Ditoto

Whoever is telling you to refinance I would say is on crack vs a HELOC.

While it may look better, why pay a higher interest rate. Also with a heloc your only paying when you use it. If you do cash out refi and $ were to sit in bank account you are paying interest on unused $