HAVE YOUR CAKE AND EAT IT TOO?! · CA Real Estate Insiders

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HAVE YOUR CAKE AND EAT IT TOO?!

HAS ANYONE USED A HELOC AS PART OF THEIR STRATEGY?

This can be a powerful technique for a real estate portfolio if done correctly. Instead of selling your home to purchase another one, you can borrow against the equity to finance the next deal and use the rental income to pay the principal back down.

Another thing that most people don’t know, even if you have a low interest rate, you still may pay a lot less in interest over time than a traditional mortgage or a cash out refi. I have seen a 26 year mortgage with 3% interest, paid off in 6 years when converted to a HELOC. She still saved over $50k on interest over the life of the loan.

This is one of the cornerstones of self banking strategy. But not all HELOCs are created equal. You get the most benefit if your HELOC is in first position, interest is calculated every 24 hours, it is an interest only loan and you have a checking account linked to the loan account so 100% of your income is paying down principal.

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