Let’s get that $$ already in your home!

Last week, we talked about two ways to access the equity in your home: the cash-out refi or the home equity loan.  Now let’s talk about my favorite two.

First, the home equity line of credit (HELOC). This is very different from the loans we talked about last week - I like the line of credit more because you don't have to use it right away but whenever you need to use it, it's there.

Let's go with that same $500k house that you have a $300k mortgage on - you can probably get a LOC of $100k. Now say you need to buy a car for $40k and you don't want to use the bank.  Instead you take $40k from your LOC, but you pay interest only on that $40k.  The payments are interest only, which is much lower than interest + principal payments like other home loans. Another perk is once you start paying it down, the interest decreases. Say you get a tax refund for $10k and pay the LOC down. Now you only have $30k that you’re paying interest on.

The HELOC is the single best financial move you can make for safety and liquidity.  The caveat here is that you want to apply for and get the LOC going before you actually need to use it, so the best time is now. It can take up to 60 days for these lines to close and if you wait till you actually need the money, you won't get it in time.

This last way to access equity only works with investment property. If you have an  piece of investment real estate, you can get a hard money loan. These loans are different from the other types we've mentioned before because they can be much faster. Instead of a 30-60 day close, you can close in days, and it will need minimal docs.  For that convenience, though, you will pay higher interest rates and fees. If you have that $500k house, but no mortgage on it, you can get up to $350-400k quickly.  We can provide these loans so if you ever need funds fast, just reply and let me know.

This is a tumultuous time in real estate.  If you need any guidance or just someone to bounce ideas off of, reply and let me know.