Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Creative Real Estate Financing
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 5 years ago, 01/03/2020

User Stats

952
Posts
1,151
Votes
Jon Schwartz
  • Realtor
  • Los Angeles, CA
1,151
Votes |
952
Posts

HELOC: lower APR vs. interest-only payments

Jon Schwartz
  • Realtor
  • Los Angeles, CA
Posted

I'm going to apply for a HELOC on my primary residence to fund BRRRR properties. In shopping around, two options beat the rest, and I'm having trouble deciding between the two.

Option 1 is a 4.05% APR with interest-only payments during the 10-year draw period, and principal-plus-interest payments during the 20-year repayment period. A $100,000 advance during the draw period will cost $337.50/month.

Option 2 is a 3.74% APR with principal-plus-interest payments during both the 10-year draw and 20-year repayment periods. A $100,000 advance during the draw period will cost $471.23/month, with about $160 going toward principal and $312 being interest at the start.

(These are both adjustable rates. They both adjust with PRIME.)

I know there's no "right" answer, but I'm curious to hear opinions. Option 1 means a lower carrying cost. Option 2 costs more, but the interest is less, and the added cost is just buying back equity in my own home.

Which would you choose???

Thanks!

    Loading replies...