heloc vs cash out refinance | The Kwak Brothers

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Time and time again, I see people choosing to focus either a mortgage or an investment but not both at the same time. But which option is better to start with? In this article, I will show you how you can invest AND pay off your mortgage without the diminishing effects of either process. I want to show you that it’s possible to pay off your mortgage and invest simultaneously. More often than not, such a decision often depends on your financial situation. While many people believe that paying off money is best since it saves on your interest payments, others may want to invest their extra

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September 29, 2020

HELOC Strategy: Is it Still Worth It? (SERIOUS UPDATE)

We’re back with the HELOC Strategy content! (Velocity Banking, Accelerated Banking, Pill Method, Mortgage Acceleration). As you know, we’re a huge fan of using a HELOC to pay off your mortgage. But with the changing financial climate in the mortgage and refinance realm of banking, banks like Chase, Wells Fargo, and Navy Federal Credit Union, tightened up their lending of the HELOC or even canceled the HELOC completely. But other HELOC Banks continued lending out HELOC products to consumers. We have been getting many questions lately about whether to refinance or to continue to try and get approved for a Home Equity Line of Credit (HELOC). (HELOC vs Refinance) Is it still worth it to get a HELOC to pay off the mortgage early? Can you still use a velocity banking model to pay off the mortgage early? In this video, I am going to unpack the latest update on the HELOC and if they are still lending out the Home Equity Line of Credit (HELOC)! With the interest rates on mortgages being historically low, is using a HELOC to pay off the mortgage early worth it? Why not just refinance at a lower rate? Refinance mortgage rates are super low! And is the home equity line of credit (HELOC) still available from banks? Well, 3 banks that we know are currently not approving HELOCS; Chase Bank, Wells Fargo, and Navy Federal Credit Union, while banks like Citi Bank are still lending the home equity line of credit. But the approval times have skyrocketed for the underwriting process and this applies for the home equity line of credit (HELOC) & when refinancing. Why is that? Well, this really all has to do with the market. Banks sell mortgage products and continue to try and get you to refinance every 7 years. This is because mortgage-backed securities are sold on Wall St. And right now, major investment funds have NOT been buying these MBS because of the current economic situation, so banks are hesitant to sell mortgages to consumers. Is a HELOC still worth trying to secure or should you refinance? YES, the home equity line of credit (HELOC) is still the best option when velocity banking to pay off the mortgage early & you can use the HELOC for an investment property. HELOC(s) can also provide financial safety nets. HELOC vs Refinance (Refinance vs HELOC) So is it still worth getting the HELOC to pay off your mortgage? The answer is Yes and No… Now, remember, HELOC interests also ride on the WSJ Prime Rate. In fact, some HELOCs are based on LIBOR but next year, it’ll be phased out to SOFR (Secured Overnight Financing Rate) The current SOFR is at 0.10% which is ridiculous low. So if your argument is, well Sam… I just want to refinance because the rates are low… Why not get a HELOC that also has a low interest rate. Some of my clients in our private membership got a 2.99% HELOC or 3.75% 1st lien HELOC. But using a HELOC to paying off your mortgage transcends playing the interest rate game because you’re driving the principal balance down so low that even at a higher rate, the effective interest amount on the HELOC is lower at the end of the day. PLUS… you can use the same HELOC to acquire investment opportunities such as buying rental properties and cash cow businesses that have higher return than the HELOC interest rate.
August 18, 2020

Cash Out Refinance VS HELOC: Which is BETTER for Real Estate Investing?

Cash Out Refinance VS Home Equity Line of Credit (HELOC) which one is better in the context of real estate investing? In this video, I am going to talk about the differences between cash out refinance and the home equity line of credit (HELOC), what are the pros and cons when it comes to using it for real estate investing, and what are some of the things you should watch out for when using a cash out refinance or HELOC. A brief summary of what both cash out refinance and a home equity line of credit involves taking the equity out from a real estate property and turning it into reusable cash, essentially borrowing from how much equity you own in a property. BUT cash out refinance and a HELOC are structured differently AND it affects the cost of borrowing! A cash out refinance, for example, for real estate investing purposes, benefits those in a high equity position in their property, meaning, upwards 80%-100% in order to have enough cash to use as investment capital. A cash out refinance works the same way as a regular mortgage. During the process of getting a cash out refinance, the bank requires a property appraisal so they can value the home properly. Just like getting a traditional mortgage, the bank looks at FICO scores and credit rating to determine your interest rate. And then typical costs associated with closing on a typical mortgage. Once all the documents are signed and good to go, the bank will cut you a check and send you on your way! A home equity line of credit is similar to a cash out refinance in the sense that you are borrowing from your property’s equity, but instead of refinancing, a HELOC is a line of credit, so its revolving debt as compared to a cash out refinance, where it’s installment debt. So it’s essentially a line of backed by your property’s equity. So one of the big differences between a cash out refinance and a HELOC is the way the debt is structured. A cash out refinance, being an installment debt, is a one-time use type of loan. So once you get that check from the bank, after being approved for a cash out refinance, you can only use it once. On the flip side with a HELOC, it’s a line of credit, so you can continue to use that line of credit since it is revolving debt. So when it comes to using either for real estate investing, the HELOC can be used again and again! So in conclusion, I choose getting a HELOC over a cash out refinance in regards to real estate investing, more flexibility, more opportunity for investing The Kwak Brothers are millennial real estate investors who have acquired over 82 Units of Rental Units and have raised over $20,000,000 of capital for their real estate deals. They are based out of the Chicago-land area and they are dedicated to helping hard-working people become financially free real estate investor! They specialize in owner financing acquisition and raising capital. They are the creator of the FORCE Strategy (Find the deal, Owner Finance It, Raise the Capital, Cashflow It, and Expand your Financial Freedom)📧 Get Our 1:1 Real Estate Investing Coaching and Mentoring: https://52.54.205.26.104.nip.io/thekwakbrothers