Cash Out Refi or HELOC?

[Ray Martinez]

Hey everyone,

I'm looking to tap into the equity of my home in order to invest into a 2nd property.

My question to you is if I should do so as a HELOC or as a Cash Out Refi?

I'm expecting about $80-$100k would be available. My plan is to hold this primary residence long term.

I'm wanting to get a Single Family residence as the investment property, perhaps in Phoenix, AZ. ( I reside in So CA).

Appreciate the advice in advance!

[Chris Davidson]

@Ray Martinez There is a lot of toss up on this one. First I would say the HELOC can be cheaper if it takes longer to find an investment as after setting up there is no cost until a draw is made. The Flip side to this is that doesn't spark the fire to get an investment going with the newer usually larger payments coming in and a pile of cash just sitting there. If you are ready to buy know your cost the cash out could be better as the rates are lower.

The flip side is say you cash out at 80k but needed 100k for the deal, or you cash out for 100k and only needed 80k but are now financing 20k you didn't really need for the next 30 years. Granted probably only pushed your payment up 80/ month for that extra 20k. 

I personally am a fan of the HELOC but think both have advantages. Best of luck Ray!