Originally posted by @Mitzmichael Sumilang:
@Michael Bracken if I refi first and exhaust that, wouldn't I already be out of equity to get a HELOC? From what I gather a refi and heloc are basically the same equity just paid differently. A refi I would immediately start paying along with bigger closing costs, but a fixed rate over a longer period of time. A HELOC would only be paid once I use it at a higher rate for a shorter period of time. The whole closing costs is a big difference at this point. Trying to see the benefit of paying more closing costs at a refi.
Yes, you are right. Here in Texas, a Heloc is only for primary residence.
Here is a response I got from @Tyler Hodgson while discussing a refi and a Heloc for myself.
@Michael Bracken why not do cash out refi on primary at 4.5% 30 year fixed rather than a 6% variable heloc. I would be locking in as much 4% 30 year money as you can right now.
If the rental isn't cash flowing with 70-80% LTV you might be best selling that rental to get the equity out and finding a rental with lower taxes. Have you disputed the property's assessed value?
Even on the rental I think a cash-out refi at 5% for 30 year fixed would make sense. I'd rather have $50k in hand with only $100/month in cash flow than spend $40k out of pocket to get $1000/month in cash flow. That would take like 100 months to recapture the cash savings there. I don't know the exact numbers on your property so these are estimates, but I hope you understand what I'm trying to say.
In summary, I'd lean towards cash-out refi on 30 year fixed loans to borrow some cheap money. Hope this helps!
