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Why do a cash-out refi instead of taking out a HELOC?

I've been getting more positive feedback for a HELOC rather than a cash out refi. What are positives that I am not understanding? by socalddy189 from San Diego, California. Apr 27th 2017 Reply


Laleh Hanks (laleh@americachoicemortgage.com)
#1087 ranked lender in California - 13 contributions

Hello, each situation is very different. It depends on your LTV and fico. Some Cash Out transactions are much, much better than taking a HELOC. Also depends greatly on your current rate and financial situation. We can talk about the pro's and con's as there are on both sides but it is hyper specific to your personal situation. If you can cash out in a fixed rate loan that is lower over all then I would do that. the HELOC has some risks but also so great benefits. feel free to email me or call. I have been lending for 15 years and I love to educate through the process. We really should have more of this very important information in high school but they don't really give it to us. No question is a silly question...but not asking a question is silly! feel free to reach out. We are here to help analyze your scenario and put it forth in a way you can easily understand and make the best choice for yourself. Laleh(at)AmericaChoiceMortgage.com

Apr 27th 2017
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,007 contributions

Reasons can vary, and each one has their pro's and con's.. A cash out refi puts you into a lower "locked" rate.. most HELOC's are a variable rate. Refi's are fully amortized loans.. HELOC's are typically interest only for the first 10 years. then become a fully amortized loan for the remaining 20.. But with a HELOC, you apply one time and have unlimited use of your home's equity for the first 10 years.. borrow against it, pay it off.. and do it again.. just like a revolving credit card.. It basically comes down to you.. what are your needs.. I'm a preferred Lender with Arizona and California being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com NMLS# 226347 / RPM Mortgage NMLS 1541014 / AZMB0121893

Apr 27th 2017
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Larry Gray (lgray_312_247)
#565 ranked lender in California - 1,127 contributions

One thing perhaps not conveyed to you as a reason to choose one loan over the other is cost. The size of heloc loan and your ability to pay it off are important factors as is the cost of the heloc compared with a cash-out refinance.You can get a heloc loan for next to nothing in cost at the lowest possible rate providing you have respectable credit scores. Rates are very low right now and they are not anticipated to go up much for some time to come but on the other hand, sometimes in the past they have climbed fast enough. So if you do not need to borrow all that much and you feel you can pay off the heloc in a reasonable time it might be the way to go. Otherwise, when considering a cash out refinance you usually want to be sure it is about the same rate or better than your current loan.I usually compare a no cost cash out refinance with one with fees in tact, but no additional points. Usually it is a two eighths rate difference between the two choices.

Apr 28th 2017
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