HML vs. HELOC or HEL

[Brian Jackson]

I'm sure this has been asked on the forum previously, but asking again for some fresh perspectives. What would be the advantages/disadvantages of using a HML vs leveraging the equity in my (house-hacked) home?

TIA.

[Nicholas W.]

This is going to be largely dependent on your long term strategy. If you said you were looking to buy and hold it wouldn't make sense to pursue hard money unless you had a clear cut plan to refinance out into long term debt in a fairly short period. Personally I say the same with a HELOC as they typically are adjustable and the term is typically shorter (5-7 years.) This makes them risky for a long term hold since if the value of your home drops you may not be able to renew the HELOC at the end of the term and will be put in a tough position. If you're flipping either one of those is a perfectly fine source of funds, exhausting a HELOC first given the lower interest rate. For long term holds I would say a home equity loan is your best bet as a fixed rate and term can usually be obtained providing peace of mind and allowing you to predict your future expenses more accurately. That's my take on it.