What is the best way to tap into the equity of primary residence?

[Anna Toi-GB]

Do banks currently offer second mortgage or heloc? My primary residence has an interest rate of 3.75%. With good credit score, tax returns, and income, will the bank need to refinance the whole mortgage? I think it might cost less to take out second mortgage than to do refinance.

Outstanding balance(principal) : 165K

Trulia estimate 364K, zillow estimate  368K, Redfin estimate  405K

Conservative appraisal of 350K I can take out 100K. 

With this size of equity, would it make more sense to do refinance (and pay for closing costs) or second mortgage ( no closing costs? higher interest rate).

I plan to shop for both options, but would like to know more about other fees associated with each loan. 

[Andrew Postell]

@Anna Toi-GB banks do offer HELOCs currently. Nearly every bank that has a checking and savings account will have a HELOC available for you. Now, they will not lend to 100% of the value of the property. They will require you to still keep some equity in your home no matter what but it does seem like you have a good amount of equity to use. Some pros/cons of HELOC vs. Cash Out Loans:

HELOCs

PROS

• Super low costs
• use it whenever you need it
• Pay it back and use it again (if you were flipping)

CONS

• Adjustable interest rate (a con if you needed to have money for a long period of time)
• After 10 years it "matures" into a different loan product with a higher rate

CASH OUT LOANS

PROS

• Fixed Rate

CONS

• Higher Closing Costs
• Start Paying Interest Immediately
• Have to roll in your first mortgage into the new loan

The big thing is really what are you using the money for.  If you need a long term loan because you are buying and holding (or something like that) and adjustable rate might be very difficult 3 years from now.  Hope this helps!