HELOC vs. Home Eq Loan vs Re-Fi for Primary Residence

[Dave Williamson]

Hey guys, 

I have recently started acquiring buy and hold rental properties, and I'm looking to free up cash to grow my portfolio.

- Notes: my residence has approx $200k equity and is currently a few years into a 30-year conventional mortgage at 3.25% interest. I feel that the cash out re-fi would typically be a great option, but I don't want a significant increase in my overall interest rate.

HELOC vs. Home Eq Loan vs Re-Fi. What do you recommend as the best means of pulling cash from my primary residence? Interest only or principal plus interest loan? pros and cons? Do any of the above count as an additional mortgage in my Fannie Mae 1-10 loans? Thanks!

[Charlie Fitzgerald]

I would always do the refinance of the 1st and pull out the equity. Yes, your rate will be .50-.75 higher than it is now...It will still be lower than the rate on a HELOC and...You will also have only one lien on your home...not two. you also will get your equity out of the house and put it to work for you making a lot more return than it will make you sitting in your equity bucket. If housing prices continue to appreciate, the equity you pull out will be replaced by market appreciation...if housing prices flatten or fall, you'll be glad you got the equity out of there via a new 1st mortgage.