Refinance, HELOC, or Home Equity Loan?

[Jonathan Escobar]

My best friend's mom asked me about her house in Everett Washington WA. I told her that it might be a good idea to refinance her town house because she purchased it for $200k and now it is worth around $350k from market appreciation. I assumed that she might want to refinance and get her house reappraised so it is worth more. She has only remodeled the kitchen. Is it a good idea to refinance her mortgage to pull out the money from appreciation ($150k = 350k-200k) assuming that the rates are about the same?

Obviously she should talk to a lender to see what is possible but is there a way to calculate if it will be profitable for her to refinance and take out the equity? or is it best just to HELOC or get a home equity loan? I feel like that would cause her payments to go up way more than a refinance. With a Home Equity Line Of Credit, it's like a giant credit card that you have to pay back like a short-term loan. A Home Equity Loan would increase the payments that you have on the house. But wouldn't a refinance increase the value of her home and then take out the equity that she wants while still having around the same payments per month on it if she left a good chunk of the equity in the house?

I'm trying to understand how refinancing can supercharge your investing. This is a little bit different than BRRRR because she didn't buy the house with cash. Typically you buy a house with cash and then cover the holding costs until you can rent it out and refinance. How does it change if you buy a house on a long-term loan and then want to refinance after that?

Or in another situation, if you have 100 rental units that have been rented out for years, how do you know which ones you should refi to get cash out to use for more deals? Do you want to refinance when the market prices are at its peak? or does it depend on whether the numbers work for cash flow purposes?

[Aaron Flake]

Do you know what her interest rate is? I just got a Heloc on mine and used that cash to buy a house. You use whatever cash you need and don't make any payments on it until you use it. Great for BRRRR in my opinion.