All Forum Posts by: Michael L.

 It's always good to have, but only use it if and when necessary.  HELCOs are good for short-term use but can be pricey.

 HELOCs are great for short term debt like funding a flip. They are not great for down payments.When determining which to use, I'd look at the interest rates, return on investments, and your overall risk profile. 

I have used HELOCS to 1. pay for a downpayment on a new investment property and 2. payoff another property to maximize my cashflow

Cash out refis are great in an up market or if you've owned the property for awhile. 

You can use both for short and long term purposes just remember to use snowball method and payoff your highest debts first //or refi when rates go down

Your credit score will take a hit with the heloc and banks will sometimes count the entire funds available as though it were all used when calculating dti for other deals.

 There is no interest or fees to be paid on helocs if there is no balance . should always get one to have funds if needed 

Hey @Michael L. great question!

HELOCs are great for quick cash needed, and ones where you'll pay down the balance relatively quickly (think 0-12 months). Keep in mind HELOCs are interest only payments, adjustable rates, and will eventually turn into a fully amortized loan (usually after 3-10 years).

Cash Out Refinances are great when you need the cash for long term needs or consolidating debt. These have added benefits of being fully amortized from the start, and lower rates than HELOCs. 

One of the most over looked things is looking at blended rate IF you are consolidating debt. Most cash out refinances will have a lower rate than the current blended rate (even if someone has a sub 3% first mortgage). However, if you are using a HELOC to improve a property it can be a great way to keep expenses low and refinance later when rates drop.

They're pretty much free unless they have minimum draw amount at closing . always get a heloc if it can just stay open with no balance