Home equity loan for $149,000 at a 9.8% rate

Minneapolis, Minnesota
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Home equity loan for $149,000 at a 9.8% rate

Brenden Sperl
Member since 2023 · 10 posts · 3 votes

I just received a quote for $149,000 of equity at a 9.8% rate in order to purchase another rental property. Is this a high rate? Does is still beat "not paying taxes on your equity by selling"? And is there more competitive rates with other companies that you guys may know of that I don't. Please reach out to me, thanks.

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Patrick Roberts
Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
1y

I'm assuming this a second position loan against the equity in your primary home. If so, then most lenders are at WSJ Prime + a spread on these types of loans right now. Whether this is a line of credit vs a closed-end loan, the tenor of the loan, your FICO, and the CLTV on the property will all impact your rate. 9.8% is probably a little high, but if your FICO is below 700, then this is likely on target.

For reference, WSJ Prime is 7.5% as of this morning. 

If this is first position and the property is currently free and clear, you'll be much better off with cashout refinance.

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  • Patrick Michael
    Member since 2025 · 17 posts · 16 votes
    1y

    I'm quite new at this myself but can I ask? Did you live in the initial property and what type of loan did you use ?  I believe those are 2 significant factors. 

    0Reply
    • Brenden Sperl
      OP
      Member since 2023 · 10 posts · 3 votes
      1y
      Quote from @Patrick Michael:

      I'm quite new at this myself but can I ask? Did you live in the initial property and what type of loan did you use ?  I believe those are 2 significant factors. 

      I used a home equity loan on my primary residence 
      0Reply
  • Patrick Roberts
    Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
    1y

    I'm assuming this a second position loan against the equity in your primary home. If so, then most lenders are at WSJ Prime + a spread on these types of loans right now. Whether this is a line of credit vs a closed-end loan, the tenor of the loan, your FICO, and the CLTV on the property will all impact your rate. 9.8% is probably a little high, but if your FICO is below 700, then this is likely on target.

    For reference, WSJ Prime is 7.5% as of this morning. 

    If this is first position and the property is currently free and clear, you'll be much better off with cashout refinance.

    3Reply
    • Brenden Sperl
      OP
      Member since 2023 · 10 posts · 3 votes
      1y

      @Patrick Roberts my fico is 734 and yes this would be a second loan on the equity in my primary residence. What would you recommend doing?

      0Reply
  • Adam Michael Andrews
    Investor · Austin, TX · Member since 2017 · 107 posts · 89 votes
    1y
    Quote from @Brenden Sperl:

    I just received a quote for $149,000 of equity at a 9.8% rate in order to purchase another rental property. Is this a high rate? Does is still beat "not paying taxes on your equity by selling"? And is there more competitive rates with other companies that you guys may know of that I don't. Please reach out to me, thanks.


     That’s expensive money, and it can get more expensive. Unless you have the deal of the century, it’s pretty likely you’ll be adding a lot of risk to break even or worse.

    2Reply
    • Brenden Sperl
      OP
      Member since 2023 · 10 posts · 3 votes
      1y

      Okay. At what rate is it a good idea? It's going to be a lot harder to a scale without that equity.

      0Reply
  • Calvin Thomas
    Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    1y
    Quote from @Brenden Sperl:

    I just received a quote for $149,000 of equity at a 9.8% rate in order to purchase another rental property. Is this a high rate? Does is still beat "not paying taxes on your equity by selling"? And is there more competitive rates with other companies that you guys may know of that I don't. Please reach out to me, thanks.


    You are building a house of cards which will fall.  This is financial suicide.  You are trying to fly before you can crawl.
    1Reply
    • Denis PonderPro Member
      New to Real Estate · Yuma, AZ · Member since 2023 · 280 posts · 246 votes
      1y
      Quote from @Calvin Thomas:
      Quote from @Brenden Sperl:

      I just received a quote for $149,000 of equity at a 9.8% rate in order to purchase another rental property. Is this a high rate? Does is still beat "not paying taxes on your equity by selling"? And is there more competitive rates with other companies that you guys may know of that I don't. Please reach out to me, thanks.


      You are building a house of cards which will fall.  This is financial suicide.  You are trying to fly before you can crawl.

      I'll play on this a bit. Do you have the income to cover the HELOC payment if the deal doesn't work out? Or in the interim while you are making the deal work out? Or, do you need the deal to work out well to have the funds to cover the cost of the HELOC? If you can't cashflow the HELOC and don't have the reserves necessary to weather a bit of a storm, this advice should be listened to. I assume, since you are looking to get a HELOC to cover the investment in some way(s), you might be in a tight spot with cash flow and/or cash reserves. Proceed with caution if that is the case.

      My wife and I used a HELOC to cover the down payment on a SFH and two BRRRR properties. None of them went perfectly and according to the original plan. Make sure you have the funds to survive when things don't go as planned.

      0Reply
    • Calvin Thomas
      Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
      1y
      Quote from @Denis Ponder:
      Quote from @Calvin Thomas:
      Quote from @Brenden Sperl:

      I just received a quote for $149,000 of equity at a 9.8% rate in order to purchase another rental property. Is this a high rate? Does is still beat "not paying taxes on your equity by selling"? And is there more competitive rates with other companies that you guys may know of that I don't. Please reach out to me, thanks.


      You are building a house of cards which will fall.  This is financial suicide.  You are trying to fly before you can crawl.

      I'll play on this a bit. Do you have the income to cover the HELOC payment if the deal doesn't work out? Or in the interim while you are making the deal work out? Or, do you need the deal to work out well to have the funds to cover the cost of the HELOC? If you can't cashflow the HELOC and don't have the reserves necessary to weather a bit of a storm, this advice should be listened to. I assume, since you are looking to get a HELOC to cover the investment in some way(s), you might be in a tight spot with cash flow and/or cash reserves. Proceed with caution if that is the case.

      My wife and I used a HELOC to cover the down payment on a SFH and two BRRRR properties. None of them went perfectly and according to the original plan. Make sure you have the funds to survive when things don't go as planned.


      You quoted the wrong person dude.
      0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Brenden Sperl:

    I just received a quote for $149,000 of equity at a 9.8% rate in order to purchase another rental property. Is this a high rate? Does is still beat "not paying taxes on your equity by selling"? And is there more competitive rates with other companies that you guys may know of that I don't. Please reach out to me, thanks.


    My recommendation: I would not take a loan at 9.8% to purchase another rental property. you could get a DSCR loan for 2% less but will need 25% down payment

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    1Reply
    • Calvin Thomas
      Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
      1y
      Quote from @Chris Seveney:
      Quote from @Brenden Sperl:

      I just received a quote for $149,000 of equity at a 9.8% rate in order to purchase another rental property. Is this a high rate? Does is still beat "not paying taxes on your equity by selling"? And is there more competitive rates with other companies that you guys may know of that I don't. Please reach out to me, thanks.


      My recommendation: I would not take a loan at 9.8% to purchase another rental property. you could get a DSCR loan for 2% less but will need 25% down payment


      He simply cannot afford it yet.  He should save up and he'd be better off in the long (and short) run.
      1Reply
  • Patrick Michael
    Member since 2025 · 17 posts · 16 votes
    1y

    This answers here have my anxiety up to hit the my multi family books harder before making any moves . 

    0Reply
  • Peter W.
    Member since 2020 · 351 posts · 329 votes
    1y

    Not a good loan rate.

    Here are the "current" rates for my local credit union: 

    FLFCU Loan Rates  These are probably about .5% lower than what we would actually get today based on how mortgage rates have shifted.

    As others have mentioned, even at a good rate, you're going to have a hard time finding a deal which will cover your HELOC/Equity Loan and investment note. You're probably best waiting. Even if you got the rate at 6%, I would still be hesitant as you are risking both properties if things go south.

    0Reply
  • Rod Merriweather
    Member since 2024 · 13 posts · 5 votes
    1y

    I think that's probably around the going rate for HELOC's right now. If you do get the HELOC you'll only have to pay interest only for a few years usually the first 10 years. If you do this I would use it simply for my down payment 20-25% in most cases. I would then have a plan to pay off the 20% HELOC as fast as humanly possible. Ie buy including the payment & some principal into your overall cost which could affect your cash flow significantly. You could also pay the HELOC loan back with your W2 income. Consider a strategy with the worse outcome in mind & then still have an extra exit strategy. Just protect yourself and what you've achieved thus far. Good luck 👍🏽

    0Reply
  • Stanley Yeldell
    Member since 2025 · 116 posts · 52 votes
    1y

    Hi Brenden,

    A 9.8% interest rate on a home equity loan is definitely on the higher side compared to traditional HELOCs or home equity loans, which often range from about 6% to 8% for borrowers with strong credit. But rates can vary widely depending on credit score, loan-to-value ratio, and the lender.

    Whether it “beats” selling equity depends on your goals. Taking a loan means you keep ownership and potential appreciation, but you’ll have monthly payments and interest costs. Selling equity (like a cash-out sale or equity partner) avoids monthly payments but means giving up part of your upside.

    If your primary goal is to build rental portfolio cash flow, consider:

    Shopping around with banks, credit unions, and private lenders for better rates.

    Exploring alternative financing like DSCR loans or portfolio loans, which might offer better terms if the rental cash flow is strong.

    Weighing the tax benefits of mortgage interest deductions against the cost of the loan.

    If you want, I can help connect you with lenders who might offer more competitive rates for your situation.

    Hope this helps!

    0Reply
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