HELOC or REFI for Down on STR

[Paul Aguilar]

Hello, 

My wife and I are looking to get into our first STR. We own a condo and have equity in the property. We want to use some of that for a down payment on a STR. We have discussed either doing a REFI and pulling some cash out and yes, get a higher rate OR get a HELOC and use the LOC as needed.

Does anyone have any insight they can share on which would be better to use? I like the notion of having cash from a REFI in the bank and although we would get a higher rate, if we stick to a new MTG amount we can pay, I'm good with it. My wife likes the HELOC idea since we can pull money as we need and not touch the rate on the current loan. Both can work and have pros' and cons'.

Any info or advice would be greatly appreciated BP fam. 

Thanks!

[James Dainard]

Hey Paul,

If you think that the additional income from the STR will help you pay down the HELOC faster than the refi you should go with that option since you'll be saving a ton of money in interest and it will help you move on to the next deal a bit faster.

If it makes you more comfortable to have a slightly higher payment with a refi then that's a safe option as well.

Either way, it sounds like you're being thoughtful about it so you should be just fine!