HELOCs Vs Home Equity Loans Explained | The Pros and Cons
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- เผยแพร่เมื่อ 4 ต.ค. 2024
- We discuss the differences between a HELOC (Home Equity Line of Credit) and a Home Equity Loan
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My Dad bought a $300K house in 1993 here in San Jose. It's worth $1.6 Million now and because he took out so many Home Equity Loans, he lost the House and has nothing to show for it. I will never borrow against my house.
it’s a personal decision, but Forbes says housing activities will remain stagnant for the most part of the year, so maybe hold off a little.
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Home equity line of credit over HEloan every time more flexibility and you can find HELOCs with zero closing costs
Awesome!
Not if your credit score sucks, your DTI is too high, or your have a mfg home.
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Awesome!
Debt is like fire. It can be used to cook your food and keep you warm or it can be used to burn your house down. It is the responsible use of it that matters.
Awesome!
Love this analogy
Yes sure
@@ob2be1 Amen
@@Maggiemagic305 Amen
Line of credit - that makes a lot of sense of how Matt explains it.
Awesome!
I'd rather an equity loan. HELOCs have fluctuating interest rates. I'm not in the financial position to afford fluctuating interest rates.
THIS IS AWESOME INFORMATION!!!! I WAS ABLE TO PURCHASE MY HOME WITH YOUR GUIDANCE DURING THE PANDEMIC WITH 1.5% INTEREST RATE!!!!! kEEP THE INFO COMING
Awesome!
MG! Loved how you explained this topic. I just was hired into the mortgage business and is absorbing all the insight possible
My firt time listening to you, and absolutely loved how everything was explained. THANK YOU
Awesome!
This is brilliant. We've been considering a HELOC to invest in another home ourselves. I have never heard it explained so concisely. I will definitely be using this video to show to my real estate clients looking to invest!
Awesome!
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I can't express how helpful this was thank you!!
Awesome!
Thanks for explaining the difference. I’m not looking to invest the money where I would need a revolving line of credit so I think the loan would make more sense.
❤❤
same here
Did she say she’s not a risk taker but she wants to pull out $100K on $160K in equity?? That’s a MAJOR risk considering even a slight drop in home values (5-10%) almost puts her underwater. RED FLAG!!!
All depends on how she deploys it, If the return on her next venture is 10-15% then when the market pulls back she at least breaks even.
I think she put 100k down, then it appreciated 160k…. So that would be 260k in equity. Still don’t love the idea
You follow them too!!!
What if she do a subject 2 and that person's home is valued at 250,000 with 75% equity in the property at 187,500 with a note at 4%. It really depends on how the money 💰 is used
Exactly what I was saying. 100k out is risky business
Thank you so much MG for simplifying the HELOC process! Im able to make a concrete decision 😊
Awesome!
Credit unions are a credit place to go. I've seen helco intro rates in NY as low 1.99% for 80% LTV and 2.99% for 81%-90% LTV for 13 month. After the intro period, the rates are pretty much the same across board.
@@RynAmelli84 Too many questions.
Started mine at 2.5 % then the rates rose as we all seen . Now it’s at 7.2 % serious increase in the last months wow . Interest only payments that tripled. Mortgages are cheaper rates wow
wow. perfect timing ,, just had a call today about a HE Loan ,, was kind of feeling it though ,, my man sounded so calm and soothing,, def knows the business,, thx for sharing. ill keep u posted.
Awesome!
Did you end up taking the loan?
@@TeeLovee100 I just secured a $50,500 HELOC, 10.25, 3 yr Draw, 7 yr hold, 20 yr repayment. Have to use a check book to make withdrawals, 48 hours to post mountain time.
The HELOC is really a best kept secret if you doing the business right.
Awesome!
Very nicely done (explanation). Thank you for sharing this true "nugget" on the difference. So when I see HELOC and Home Equity Line of Credit, appears to be the same. However, you broke it down so clear I now know they are truly different. While one is a loan the other is a line of credit that is revolving and you only pay what you use. While with the other you pay on the full loan and it is not revolving or reusable.
But the home line of credit the interest will change it can go up or it can go down. If it goes up then your monthly payment will go up. I don’t think I like that.
Awesome!
Great video! Great explanation between HELOC VS HELOAN. Thanks.
Awesome!
Thank you for the explanation I was so confused now I can make a better decision.
I refinance my mortgage before the pandemic and used my HELOC to get a 3.39% rate...I paid $100 to lock in that rate to a FIXED rate. The Heloc is always a better choice...use it with caution but it is good to have...I have it if I need to do something major on my home.
Thank you for the information, actually made a life decision based on the information provided.
This was dope! We’ll be adding the HELOC to my tool kit as well, sitting on dead equity myself. (Dead meaning if it’s not in use, home equity is just ego stroking your net worth)
Thank you for this video. I'm needing a loan to buy land and looking for the best way to get the money. This definitely helped.
Me too I’m sick of HOA
Awesome!
Excellent and incredibly useful content. Thank you so much.
Awesome!
Thank you so much, I needed this. Love the way you explained it.
Awesome!
Tell them about the HELOC fluctuating interest rates my brother. One has to be able to afford fluctuating interest rates.
Only reason we clicked on this video, want a complete explanation on that.
He mentioned the rates can go up or down depending on what goins on in the market
Great talk and explainations for the types of loans. I am looking to do a HELOC, thanks!
Awesome!
Awesome love it. Clear and straight up information 😊
This conversation was very helpful . Thank you
Awesome!
Big lessons here thank you broo
Very helpful and wise advice ! Thank you ❤
Awesome!
My question is if you take out the 100k as a down payment on your next cash flowing investment property wouldn’t you be breaking even instead of increasing your monthly income? You mentioned the cash flow of the new property is going to cover your helock and your second mortgage. But rarely if ever is an investment property going to cover your second mortgage, your helock loan, AND actually put money into your pocket all at the same time… you either have to wait until the helock or the second mortgage is paid off to see real cash flow returns.
I was thinking this same thing before I made a decision on getting a HELOC,refinance,or just sell my current property and use some of that money for a larger down payment so I won’t pay PMI.
Also note you need at least 680 fico in most cases to get theses products.
What are the best places to go i got a 698?
@@jackieroach2124 I am a license loan officer and check out my youtube channel. Usually HELOC's reuired a min of 660, you should be able to get one thru your bank or any other lender that offers these products. Shop around with at least two leaders to get the best terms!
I was also told credit unions are getting tighter on these loans.
of course!! second mortgages are either getting defaulted on cause the client cant pay it back or they are getting refinanced so the bank loses money and in todays economy its too much of a risk.
This really helped me!!! I think I decided on a he-loan, my property has no mortgage it’s worth about 250k as is ima us it for 100k in renovations, should be worth about 400 then doing a heloc in a few yrs to purchase another property
I just wanna pay of high interest credit card debt, and finish my basement, should i just take out a pension loan?
How do lenders look at HELOC debt when you are applying for a new home loan, what you’ve used, or what you could potentially use?
I'm a lender. We look at the monthly payment for a HELOC or heloan. Just like a credit, we use the payment due not the potential full amount of the line of credit.
@@TimTomkowiak : Hello … do you know of any banks who offer a fixed rate for a Heloc other than PNC bank?
@@Marie34694 PNC is good for HELOC s etc there process can be slow tho. I can't think of any off the top of my head. But check with a few local credit unions
@@TimTomkowiak thank you 🙏🏽
#askMG
Although the bank can’t ensure you use the heloc for rehab purposes, are there IRS tax implications when using the money for other purposes?
I hope Jordana has a cushion in case her tenant moves or can’t pay rent. That’s a lot of debt
This was great, thank you MG!!
Thanks for thr info mg. Gotta catch you live so I can. Just don't call me stupid😂
#AskMG Here’s my question….I have about 600k equity in my home. I need 180k to convert my garage into a 2 bedroom apartment. In California we can do this. So in my case I need a set amount of money and nothing else what makes more sense for me? The HELOC doesn’t sound practical to me but what do you think??
#AskMG What if I want to pull out a home equity loan for a home addition? Which would you recommend? I don't plan on investing in other money making properties so doesn't it make more sense to stick with a home equity loan for the stable payments? This would be after I work with an architect and contract to provide a quote for the project. I would take out more than the quote just in case.
This is exactly my situation. I’m converting my garage into a 2 bedroom apartment for my son. I’m not investing in other properties but my own.
@@roseortega807 In 2 months he hasn't answered my question. Guess we'll never know his take on home additions.
@@Kagamid and 10 months ago the fixed rates were lower ,,, good luck
I feel like the system will fx!$ you anyways. I don't like either the HELOC or HELOAN.
Is there any other way you can tap into your equity w/o taking another loan?
Yup, sell your home. Especially if you fix it up and then sell it.
Hi MG, great explanation of the differences between a H 23:10 E and Heloc. I have been told the Heloc Payment is Interest only for the length of the loan. I.e., 20 yes then you still owe the principal?
#askmg
I am 71 years old and recently obtained a HELOC against my primary home. I plan to use the funds to modernize and upgrade my bathroom from a tub to a walk-in shower. I was told that this could add value to my home. According to this segment, you mentioned using the loan to invest in property to generate cash flow. Given my age, would it be smart to take a portion of the HELOC and invest in another property at this time?
Why would anyone want a credit card against there home that can be called at will. Helocs are insanity bro.
How does an equity loan work and is it good ideal?
But it's never your home. Every millionaire and billionaire knows this.
All In One Loan is the best loan product in the market. Search it. Your house will be paid off in 1/3 the time, save hundreds of thousands in mortgage interest, have a safety net if you lose your job and have access to your equity 24/7/365 up to 30 years.
You explained this well
Wow, this is the second or third time seeing this and finally i finished it totally. So much info, thanks, question is the H.E.L.O.C., only advised for investment such as real-estate, or any business what about for home improvement? Or make the most of it.
I’m leaning towards the HEloan. Leveraging my primary home is a huge risk.
If your older 60 is that too late to build wealth through real estate ?
Great information! Thank you both!
I've been approved for 30k for a heloc. I only need about 13k to pay off some debt. Can I just take what I need and nothing more?
yes
I need a person to discuss my situation with to consider my options.
Isn't HELOC interest only payments for the first 10 years? In her scenario where she wants to pull out the entire 100k right away, wouldn't it make more financial sense to get a HELOAN with a fixed rate and pay of her principle and interest together? I think HELOC is a good option for someone who needs temporary money or has a big amount of cash coming in from investments to pay it off completely in a timely manner. Can someone please explain? Thank you!
some of these are hard to get, i could refer a program i got easily.
What’s the program you used?
@@robbinbanks2869 Hey,i received my funding through Alibaba. They're great for various types of loans. If you want, i can refer you to the loan agent i worked with. Goodluck on your financial journey! 🌟💸
here's his handle..
loanagentjude
You can’t just pay off a heloc completely without interest if you owe 50k and you pay 50k towards the help not all goes towards principal
Here’s my questions. If I get a HELOC, could I buy another rental or do I need cash?
great video !! Just subscribed
Thank you, this was very helpful!!
HELOC interest rates are never locked in. They can go up.
Love the knowledge black King! appreciate the questions black Queen! Melanated!
For the best part a heloc is best for someone who has payed off a mortgage then get a heloc who wants to pay two mortgages on one house a home is for living in and not a gambling tool
First off, a house is never your home. You are just living it for a specified amount of time. While you're living in it, reap some of the benefits. That's really what a house/home is for.
@@BayouHotBoy1 yep that’s right because we all are going to pass away and a new generation will the house belongs to. But it is nice to have a free place to live before we go and give the house to children or grandchildren
The way she laid out that HELOC...I would shop around. She can get one with no closing costs, without having an intial draw. I wonder if she went through a credit union. I just took one out 150K, no closing costs, no initial draw required. 7.24%. Shop around a bit more.
good luck finding that unicorn in todays market lol
Hello,
Which institution did you take out your HELOC with?
Can you list the instruction? Thank you in advance.
If you take 100% of the heloc credit line......will that destroy you fico score. Will you get higher rate bc of lower fico score
All depends on the situation
When ya'll coming out west fam? Been across the pond and, unless I missed it, haven't seen anything about being in Cali.
Great information! Thank you, how about a heloc to pay off your existing mortgage?
Because reverse Mortg ? Were only paying the interest monthly nd d principal still same nd we can live to our own house without moving . And the value of the house Keeps going up if d economy is really gud 🙏
So if I have a rental, it's wise to get a heloc to do repairs and renovations
No use your own money.
Can you deduct the interest on your income taxes on a HELOC OR equity loan like you can on your mortgage interest?
#askMG
First off, thanks for making this video! I'm an LO and want to get into investing for myself and assisting some of my clients. My question is, for this HELOC example, the minimum draw amount was 25k, do you always have to have a balance of 25k during the draw period?
No.
almost any bank now days that i know of is gonna start your HELOC with a draw and they can be really high, SpringEQ starts you off with a draw of 50K, now given you dont have to keep the money of course but thats how you will start, most likely. HELOC's are open for 10 years where you can draw, pay back whatever you want, draw again, pay back. keep in mind the payment in that time frame is interest only so if the HELOC payment is $500 thats only interest where you need to add whatever you want to the principal ( payment can also increase due to interest rate ). my recommendation to all my clients, if you cant payback the balance in 2-3 years or less dont get one! the amount of interest you will pay in the long run if you dont pay it back quickly can be crazy where it will force you to refi. also if you are financially good and just want a safety net on the side and you know you wont use it..thats a good idea. with rates now days moving faster than normal and how high they are you need to be very careful with HELOCs
Thank you so much, subscribed!
Be wise with the money 😮
Invest smart , don’t spend the money in dumb things !
I have a lot I own in a neighborhood and I want to build a house on it for a rental. Should I get a construction loan or use some other loan vehicle?
The HELOC & the home equity loans ? Kind of d same meaning isn’t it ? I’m just wondering , if Heloc is more reasonable than reversed mortgage ?
Great episode
Please, people, don't get a heloc or heloc loan. You will regret it or might potential of losing your house 🏠. Please, please save your money for any rehab you are going to do in your house 🏠 and don't forget your goal is to be debt free. You will thank me later. The majority of people that have a Heloc loan can't sleep at night because they are in a deep hole because the interest on the loan is not fixed, and trust me, it's not fixed.
Financial literacy 101. Assets put money in your pockets. Liabilities take money out of your pockets. If a person truly understands the difference between assets and liabilities and are financially responsible, they can strategically use a HELOC, to purchase assets that produce income. For someone that doesn’t really understand the difference between assets and liabilities, a HELOC is not for them.
@@gnahthe Heloc is nothing but debt. Anyone who chose to get a Heloc loan will be swimming in deep water and especially right now the interest rate is about 10%. Good luck to everyone that takes it.
A heloc is only bad if what you’re investing your heloc money into isn’t making money ,if it’s fruitful then you’re paying it back
@@hbahena24 Is it bad if I can afford to pay it back?
@@BayouHotBoy1 well obviously not
Can I sell my home while I have a HELOC out? Say I bought a home for 100k now it's 220k. HELOC allows me to to pay high interest credit cards. Use it how I need - then can I sell the home to repay the HELOC?
When you sell the profit its taken to pay the heloc. I did had a heloc and when I sold it paid off my heloc.
New house inherited no payment I have both heloc and LOC.problem on the LOC the rate has gone up to 7.66%. I'm now in the process of paying both off aggressively I had a spending problem and getting out of debt. It was the worst thing I ever did borrowing on my home to pay my debt...robbing Peter to pay Paul. Verses getting my spending problem addressed. Plus the term is general like 10y min and you typically won't pay more.the amount of interest tie writing off isn't that much.. If I had understood I had a spending problem I would have paid aggressive on the credit card and never touched borrowed against my home.
Again it's my story.. Also if you are a number person look at the amount of interest your actually paying over the total loan.then look at how much you would pay interest if paying the credit card at your max amount.
Also since they take the money out of your account you get comfortable cause the payment can be low and your spending again.
Sorry for the story but just showing what I went through... Good luck..
I started my own business this month and I am meeting with my first client today. I retired last yr at 55 with 3 houses paid off worth 4.5 million. I will have an income stream of $20,000 per yr through my business. I realized that the secret to making a million is making better investments.
Credits to ROCHELLE DUNGCA-SCHREIBER, she has always had my back all through the process of working and investing. You can glance her name up on the internet and verify her yourself. she has years of financial market experience.....
Okay I just bought a house a couple of years ago..... My question to you is maxed out and I'm making payments on it that's the only thing that I have that's in red. Other than that everything is being paid on a monthly payment of all my necessities. My question is will the credit card stop me from getting the HELOC? #AskMG
#askmg I’m in GA and we bought our home and I take it we might be up 75k in equity. I want to know if it was wise to put a heloc to do renovations on the house to boost its value more
Personal preference. Just see the potential return of value. If you plan on selling, it could make you money on the sale. If you’re heading to keeping it, I would save the HELOC for repairs, debt consolidation, and emergencies
This helped me out a lot
what's the harm in getting another loan after you pay off and close your home equity loan?
Great conversation MG, I would like you to expand with a real world example on how to use the HELOC and the TCO.
some of these are hard to get, i could refer a program i got easily.
She got $160,000 worth of equity and tried to blow it off like it was nothing after spending only a few hundred bucks.
Is a Heloc still good for the average person with no investment properties. Because I just want the money to renovate my home and just pay if back. Is the risk worth it with the variable rate?
I’m getting all closed door trying to get a heloc for a property that’s in my LLC… I own the property free and clear, it’s worth $175k and my credit score is above 700… did you do your heloc in your own name or in an LLC
Thanks
My house is payed for. Want to use equity in my house to invest into property. Don't know what to do...
Great lesson!!!
With a HELOC can you take out actually paper cash? Or it is an actual credit card that you cannot take out cash?
This is what I found out from speaking to a lot of people There Is no difference between a HELOC and equity loan They're both designed to get your house They are hoping and planning that you can't continue to make the payments in some instances with no fixed interest rates
How’d you get her a 2.75 interest rate in this market?
Hook me up!
some of these are hard to get, i could refer a program i got easily.
How is one's net worth determined be the estimated value of a home that one owes to the bank almost in its entirety (minus whatever real equity exists in the home)? Honest question?