This is the exact video I was looking for. Thank you for the thorough explanation. I now know which decision to make because of you. Bravo for the excellent content!
Great explanations of these 3 loan vehicles. You kept it simple and were impartial as to which one is best. I like your final advice to speak with a loan officer to be clear on the type of loan that would work best for you.
Thank you so much!!! I watched many videos prior and they were all confusing. I actually understood the differences between all three. Very insightful!!
Love the video. So I bought a house last October for 330k and according to few sites is worth 400-412k. Of course I haven’t gotten appraised so I’m just speculating by what they said. My question is, I want to buy my first rental property, which option you recommended? I know my equity it’s not much but I will be using it for a down payment. Thanks.
The only reason I can see to ever do a home equity loan is if your first mortgage is in the final 10 yrs of a 30yr mtg and you're basically paying principle back and don't want to restart a whole new 30 yr/15yr cashout loan. Or the amount you're looking to cashout is very small -small and you can't beat the low interest you have on the first mtg.
Thanks, ... I like what you said. Do a home equity loan, go for the right amount. Take care of stuff, and dump some into the home principal. Get the principal down, get the intrest down, and etc etc. That way, if a sake needs to happen, then shouldn't be too much tie up.
Totally. You can do a refi any time and your situation qualifies under the net tangible benefit of converting an ARM loan into a fixed or back to another ARM. The cash out is also another benefit.
@@marcoszambrano2044 thanks for the reply... Ive chosen to go with a HELOC since it makes no point to do a refi at this time . I only owe 67k ok the mortgage.. not worth the closing costs of doing a refi..
For me, as I can't sell my flipped house so I'm thinking either HELOC or Refinance. I bought the house whole as a cash, not a mortgage, so which way will be the best option you think? Once I get money from mortgage, I'm thinking to do a new flipping house right away.
That’s not necessarily the case quite frankly. There’s more risk to the lender when you take cash so the rates are normally higher than if you just did a rate term refi (means not taking cash out)
At 6:55 did you mean the HELOC allows you to get an additional 150k instead (You said 50k?) Since your loan before was only 60% and the CLTV of 90% allows you to grab an additional 150k
What if there is no mortgage...house is paid off free and clear. What are the advantages of the Cash out refinance vs heloc vs home equity loan? Which have the lowest interest rate, closing cost, etc.? Say a $400,000 property to finance a down-sized $350,00 retirement home that will be purchased within 5 years?
So in that situation you would want to consider: A cash out refi is basically a regular mortgage. Will be a fixed monthly payment and you start paying it the moment it funds. You borrow $300k, you get a check for $300k and you pay it monthly. The downside is that… you pay every month, can’t draw, pay it down, use it again. The upsides: this will be your safest route as the rates are lower and fixed unless you want an arm loan. A HELOC gives you more flexibility. Think of it as a credit card. Same way… you have a credit line for $300k, use it whenever, pay it down or off, you don’t pay interest if you don’t have a balance. Like a credit card. Downside - rates are higher, and adjustable. You can’t go wrong with either option but from your comment if you are looking to purchase the new home within 5 years, I’d do a HELOC. Makes no sense to pay interest on a loan you won’t use right now. Hope that helps!
Can someone please help me. I owe 224k on my house, and I bought it for 300k. I want to tap into my equity, so that I can invest in other properties. My house was valued around 440k. 80% (LTV) of 440 is 352k. 440k - 352k = 88k. Obviously, my monthly payment and interest rate are higher. What happens if the market crashes and the value of my property decreases after a cash out refinance? Let's say that the value is back to 300k. This means that I will never be able to sell the house for 440k. What do investors do at this point? Wait until the market goes back up and then sell it? Rent it out?
That’s a good question. And the answer is… totally up to you! So as long as the bank keeps getting your monthly payment on time, they don’t care! You only go into foreclosure if you dont make your payments. You can keep the house and be “underwater” on the loan and live in it, or rent it out, until the market comes back and you’re no longer upside down. At the end of the day it’s a personal decision (so as long as you can make the payments) on what you want to do. In 2008 when the bubble burst, most people simply walked away from their homes because first of all, they had no skin in the game. Back then, banks lended money to everyone, with no income, no credit, no down payment. So really people just didn’t have an incentive to keep their home, or an investment home for that matter. This goes outside of your question but… with real estate, just like any other investment, it’s a long term thing. Historically, for the last 50-70 years, real estate goes up about 5% annually; including the crashes like in ‘08 or the spikes like 2020-2022. Odds are, your home won’t ever lose 40% of its value.
So question, which one is better to get to just pay off large debt? And outside of that we still plan to sell the house regardless within the next year. Would that affect the money I get form my home after I sell?
How do you qualify for your rental property home equity with good credit and low paying job. Renters cover rent now and would cover with refinance cash out?
I have a hard money loan ? Appraisal came out to 620k . My Hard money loan is approximately 280k . Would I have equity to buy more real estate property rather than waiting for the house to sale . ?
It is a good explanation. For these three options, do their have any pre-payment penalty? From hearing you, it sounds like HELOC and Home Eq Loan don't entail a closing fee, correct? Thank you.
Hi Edna. Typically no you won’t have any prepayment penalties on any of them. As far as closing costs, all of them will have it but helocs tend to have the lowest compared to regular refinances.
Unless the person is on the title, I don’t believe it would be possible. Also, the heloc company would have to be OK being in the second lien position to a private lien holder. I dont know your situation but in your case your easiest and best way to get equity from your home would be by doing a cash out refi. That way you also convert the owner finance into regular finance (if that’s what you wish to do anyways). Hope that helps.
Funny to see short sales starting to pop up - people who did cash out refinances within a year of buying in 2021 who are now underwater. Tread with caution, folks.
@@marcoszambrano2044 Maybe do a video about reverse mortgages (i.e., basics and pros and cons)? Lots of misunderstanding and misinformation about that financial instrument.
In my research, I feel the same, but at the same time it seems like the easiest. I get the variable % rate, help us in a crunch and rake our coals, when things good. But I'm noticing heloc likes to play games and hammer you on early pay
Same for the most part. I don't understand why you still have 2 mortgages if the cash out or heloc automatically takes what you owe on your home. So then you'll just owe what's left that you too from a cash out or borrow from the heloc line of credit
If I have a house that’s worth 350,000 and I only owe 194,000, can I cash out refinance for 280,000 since i don’t want anymore then the 86,000? Or would I have to refinance for the whole 350,000?
This is the exact video I was looking for. Thank you for the thorough explanation. I now know which decision to make because of you. Bravo for the excellent content!
You’re welcome! Glad it helped :)
Which one did you do?
Update?
Great explanations of these 3 loan vehicles. You kept it simple and were impartial as to which one is best. I like your final advice to speak with a loan officer to be clear on the type of loan that would work best for you.
Glad to hear!
Great explanation on these different types of loans. Here is my thought... don't do any borrowing from your house. Pay it off!! 🏠💰💰💰💵
Thank you so much!!! I watched many videos prior and they were all confusing. I actually understood the differences between all three. Very insightful!!
Thanks. This is very thorough and simple to understand.
Anytime!
Love the video. So I bought a house last October for 330k and according to few sites is worth 400-412k. Of course I haven’t gotten appraised so I’m just speculating by what they said. My question is, I want to buy my first rental property, which option you recommended? I know my equity it’s not much but I will be using it for a down payment. Thanks.
Very well explained. Thanks a lot
The only reason I can see to ever do a home equity loan is if your first mortgage is in the final 10 yrs of a 30yr mtg and you're basically paying principle back and don't want to restart a whole new 30 yr/15yr cashout loan. Or the amount you're looking to cashout is very small -small and you can't beat the low interest you have on the first mtg.
Thanks, ... I like what you said. Do a home equity loan, go for the right amount. Take care of stuff, and dump some into the home principal. Get the principal down, get the intrest down, and etc etc.
That way, if a sake needs to happen, then shouldn't be too much tie up.
Just the video I was looking for.
you explained that clearly, thank you.
You’re welcome 👍
Awesome awesome break down man. Appreciate it
Thanks. Good presentation with some different points of view.
You’re welcome. Thanks for the feedback!!! 👍
Great video. Thanks for this
Well articulated explanation!
Thanks!
Very helpful Marcos
Question, I have a house that's payed off. Looking to pull out some equity to fix up the place. What's my best option to just get some cash?
Great great video! So clear!
You’re welcome ☺️
Thanks bro!
I think the refinance option for me would be best
Depends on your goals! Both are good you just need to be sure about how they would fit into your financial strategy
Great info.. quick question.. can you do a cash out refi if you currently have a 5year arm mortgage that expires in less than 1 year? Thanks
Totally. You can do a refi any time and your situation qualifies under the net tangible benefit of converting an ARM loan into a fixed or back to another ARM. The cash out is also another benefit.
@@marcoszambrano2044 thanks for the reply... Ive chosen to go with a HELOC since it makes no point to do a refi at this time . I only owe 67k ok the mortgage.. not worth the closing costs of doing a refi..
Great video! Question, What is the different between a heloc and first lien heloc ?
None. They’re both the same thing. A first lien heloc is when you don’t have a regular mortgage.
Great video
For me, as I can't sell my flipped house so I'm thinking either HELOC or Refinance. I bought the house whole as a cash, not a mortgage, so which way will be the best option you think? Once I get money from mortgage, I'm thinking to do a new flipping house right away.
QUE TAL MARCOS, SI PUDIERAS SUBIR UN VIDEO COMO ESTE , PERO EN ESPANOL, SERIA GENIAL, GRACIAS!!
Voy a crear un canal en español pronto 👍
Sometimes the interest rate is much lower when you do a cash out refinance
That’s not necessarily the case quite frankly. There’s more risk to the lender when you take cash so the rates are normally higher than if you just did a rate term refi (means not taking cash out)
At 6:55 did you mean the HELOC allows you to get an additional 150k instead (You said 50k?) Since your loan before was only 60% and the CLTV of 90% allows you to grab an additional 150k
What if there is no mortgage...house is paid off free and clear. What are the advantages of the Cash out refinance vs heloc vs home equity loan? Which have the lowest interest rate, closing cost, etc.? Say a $400,000 property to finance a down-sized $350,00 retirement home that will be purchased within 5 years?
So in that situation you would want to consider:
A cash out refi is basically a regular mortgage. Will be a fixed monthly payment and you start paying it the moment it funds. You borrow $300k, you get a check for $300k and you pay it monthly.
The downside is that… you pay every month, can’t draw, pay it down, use it again. The upsides: this will be your safest route as the rates are lower and fixed unless you want an arm loan.
A HELOC gives you more flexibility. Think of it as a credit card. Same way… you have a credit line for $300k, use it whenever, pay it down or off, you don’t pay interest if you don’t have a balance. Like a credit card. Downside - rates are higher, and adjustable.
You can’t go wrong with either option but from your comment if you are looking to purchase the new home within 5 years, I’d do a HELOC. Makes no sense to pay interest on a loan you won’t use right now.
Hope that helps!
Can someone please help me. I owe 224k on my house, and I bought it for 300k. I want to tap into my equity, so that I can invest in other properties. My house was valued around 440k. 80% (LTV) of 440 is 352k. 440k - 352k = 88k. Obviously, my monthly payment and interest rate are higher. What happens if the market crashes and the value of my property decreases after a cash out refinance? Let's say that the value is back to 300k. This means that I will never be able to sell the house for 440k. What do investors do at this point? Wait until the market goes back up and then sell it? Rent it out?
That’s a good question. And the answer is… totally up to you! So as long as the bank keeps getting your monthly payment on time, they don’t care! You only go into foreclosure if you dont make your payments. You can keep the house and be “underwater” on the loan and live in it, or rent it out, until the market comes back and you’re no longer upside down. At the end of the day it’s a personal decision (so as long as you can make the payments) on what you want to do.
In 2008 when the bubble burst, most people simply walked away from their homes because first of all, they had no skin in the game. Back then, banks lended money to everyone, with no income, no credit, no down payment. So really people just didn’t have an incentive to keep their home, or an investment home for that matter.
This goes outside of your question but… with real estate, just like any other investment, it’s a long term thing. Historically, for the last 50-70 years, real estate goes up about 5% annually; including the crashes like in ‘08 or the spikes like 2020-2022. Odds are, your home won’t ever lose 40% of its value.
@@marcoszambrano2044 Thank you for your response! The house is big, and I can even house hack it by renting out the remaining 2-3 rooms.
Cash out refy can go up to 30 loans and equity loans can go up to 20 yr loans right?
So question, which one is better to get to just pay off large debt? And outside of that we still plan to sell the house regardless within the next year. Would that affect the money I get form my home after I sell?
How would that work with a DSCR loan?
Which option do you think is better if i have purchased my first rental property and want to purchase more
Which is the best if you own your home outright
How do you qualify for your rental property home equity with good credit and low paying job. Renters cover rent now and would cover with refinance cash out?
I have a hard money loan ? Appraisal came out to 620k . My Hard money loan is approximately 280k . Would I have equity to buy more real estate property rather than waiting for the house to sale . ?
It is a good explanation. For these three options, do their have any pre-payment penalty? From hearing you, it sounds like HELOC and Home Eq Loan don't entail a closing fee, correct? Thank you.
Hi Edna. Typically no you won’t have any prepayment penalties on any of them. As far as closing costs, all of them will have it but helocs tend to have the lowest compared to regular refinances.
In the case that I want to pay off 1 debt that is less than 50k a cash out would work better or a heloc thanks.
Can you do either one if your home is paid off?
can someone get a home equity line of credit with a home that is under owner finance?
Unless the person is on the title, I don’t believe it would be possible. Also, the heloc company would have to be OK being in the second lien position to a private lien holder. I dont know your situation but in your case your easiest and best way to get equity from your home would be by doing a cash out refi. That way you also convert the owner finance into regular finance (if that’s what you wish to do anyways). Hope that helps.
My mortgage is 136k . My house is worth 300k how much do it cash out, and what's my new mortgage?
Thanks
At 11:52... So if you take on a home equity loan of 175k, wouldn't you still have to pay that off eventually or do you just pocket that?
Funny to see short sales starting to pop up - people who did cash out refinances within a year of buying in 2021 who are now underwater. Tread with caution, folks.
You forgot about reverse mortgages.
You’re right! I totally did
@@marcoszambrano2044 Maybe do a video about reverse mortgages (i.e., basics and pros and cons)? Lots of misunderstanding and misinformation about that financial instrument.
What happens if the value drops ?
Does a HELOC have compound intrest?
Heloc has some big cons??
In my research, I feel the same, but at the same time it seems like the easiest. I get the variable % rate, help us in a crunch and rake our coals, when things good. But I'm noticing heloc likes to play games and hammer you on early pay
*I understood nothing.*
Lol lol
Same for the most part. I don't understand why you still have 2 mortgages if the cash out or heloc automatically takes what you owe on your home. So then you'll just owe what's left that you too from a cash out or borrow from the heloc line of credit
If I have a house that’s worth 350,000 and I only owe 194,000, can I cash out refinance for 280,000 since i don’t want anymore then the 86,000? Or would I have to refinance for the whole 350,000?
That’s a great question
No you can't do a cash out refinance because your LTV is at 80%.
Make sure you get a home appraisal
LTV ? FHA? You lost me in the first 2min bud.
I’m a veteran and I straight up stopped the video when you assumed. Just give all the info next time and you might have more viewers.
Outstanding presentation! Thank you