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Updated over 6 years ago,
Using HELOC works best when refinancing BRRRR
Hello everyone, When using the BRRRR strategy I always notice the refinance has many questions. A Home Equity Line of Credit seems to be the best option to use when refinancing a property using the BRRRR.
I took out a HELOC on my first rental property in 2015. I got my HELOC from my credit union at 15 years interest only 3.75% APR with a promotions rate of 2.99% for one year on the first withdraw. I paid 0 closing cost as long as I don't close the account within 2 years and the appraisal was fast, I just needed $230K and it close in 4 weeks.
I called many banks and done many research about applying for a HELOC or Conventional/other loans to refinance my next BRRRR property. The result HELOC WINS.
1- HELOC has zero closing cost.
conventional/other loans you pay closing cost.
2- HELOC has 2 ways of doing the appraisal at no cost and faster.
Conventional/other loans 1 way and sometimes at your own cost.
3-HELOC close faster 3-4 weeks.
Conventional/other loans need at least a month.
4-HELOC offer a fair 4%-5% on investment properties.
Conventional/other loans offer about the same if you pay points on some.
5-HELOC has no seasonal 6-12 month period.
Conventional/other loan have the seasonal rule.
6-HELOC lets you refinance to increase your line of credit if you notice your home is worth more than it did when you first applied at no cost.
Conventional/other loan is a period you must wait to refinance and most have a early payoff % or fee and if you get denied, you are stuck with paying the fees it took to process your application and such.
7-HELOC There's no mortgage loan limit of 4 or 10, you could have HELOC on all your properties.
Conventional/other loans there is a 10 loan conventional limit then you would have to settle for a portfolio loan which the APR is much higher.
HELOC has only 1 down fall, the property must be free and clear to maximize the loan, so if you have a HML, it won't work and most HELOC want first lien.
PLEASE NOTE-not all conventional/other loans are what I had mention. I'm sure some of you got a great APR,no closing cost ,fast closing and etc, but majority of loans are in comparison.