Cash Out Refi vs. Home Equity

It seems some home equity loans have attractive intro rates then become higher than a 30-year fixed mortgage rate. Doesn’t it make more sense to cash out refi if you plan to take/use the money? The only advantage I see to the home equity is if you want the option to take out money but don’t know if you will. That way you don’t pay interest until you take out the money. I already refinance once, so my mortgage isn’t a non-recourse loan.

I want to at least pull out enough equity to make me break even on cash flow (~$150K). Then I’ll use it for a down payment here or if a better city becomes available just add it to my brokerage account and wait to move. I can’t justify selling investments for a down payment when the equity is sitting there earning me nothing, and I’d still be cash flow even after taking it out.

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I am keeping HELOC as my emergency cash, not even touching it.

This helps me to invest all my cash into stocks, except keeping two months cash expenses.

Few of my friends were using HELOC to invest in stocks, but that has additional risk.

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Come on! Follow your own ideas, sell your properties and invest in whatever you believe.

You haven’t done that already? :smile::smile::smile:

Cash out is fine to take it as it has fixed low interest rate, while HELOC is variable, higher risk. I have taken cash out few times to purchase new home down payment.

@Jil That’s my plan if I stay in Seattle. I want to see the HQ2 announcement before I decide to buy here.

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Seattle is the best for earning and retirement as there is no state tax ! I have even visited Camas, WA during my Portland trip so that I can get double benefited by both sales tax (Portland) and state tax (Camas) . Homes and locations are fine, but winter climate and leaving BA friends/community is the issue.

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I’ve learned our weather forecasts change frequently. Don’t trust more than 1-2 days out. It all depends on if the weather is coming from north or south of the Olympic Mountains. It’s about 10 degrees colder in winter than I was expecting. Seattle had snow on Christmas for the first time in 10 years.

I think Seattle is actually a little warmer than Portland which is odd, since Seattle is further north. I guess the valley where Portland is draws in cold air.

Overall, I imagine Seattle is like the Bay Area in the 80’s (not sure since I moved there in 2004). You can be 30 mins from downtown, and it feels completely rural with acre lots. Yet your 5-10 mins from a suburb’s downtown with plenty of restaurants and shopping. We don’t have the suburb density yet that the Bay Area does. Some of the highways feel like someone just dropped them in the middle of a forest. You can’t even see any of the buildings or houses from them.

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The best thing about Seattle is boating…Get a powerboat preferably a trawler…Can take it all the way to Alaska

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You say Seattle weather is bad, but I should visit Alaska?

I have a friend who’s parents retired on hood canal. It’s about 2 hours away. Canal is misleading. They get orcas swimming through. They can catch shrimp, crab, and salmon there.

I’ve definitely thought about Bainbridge. The ferry is 35mins, and then another 10 mins on a company shuttle to the office.

I checked our Bremerton, since I know someone there. There’s a 35 min fast ferry to Seattle. It’s gentrifying, but crime is still too high for my liking.

West Seattle is cool since almost the entire length of the water is a beach/park. The lots are pretty tiny though. There’s a short ferry across to downtown.

I went all the way to Desolation in BC. Beautiful warm water. The farther up the inland passage the warmer the water got. Huge tides but no waves…75 degree water

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So there is still a lot of land available to develop. With the relatively flat land, it should be easy for urban crawling. Seattle lacks a presence of major national homebuilders and there is very few master planned development. Do you know why? Was the population growth slow?

If you plan to buy a house within 1-2 years, it might be a good idea to cash out refi to lock in the low rate. Heloc rate will keep going up with the prime rate. A Heloc on rental property will cause a higher rate as well.

It didn’t really grow from 1960-2000. Population actually declined for years after Boeing went bust. It took decades before the Microsoft boom replaced that population. Now Boeing, Microsoft, and Amazon are all growing. There’s smaller companies doing well do, but those big 3 dominate the job creation.

We do have national home builders, and they are building communities. They cram in the houses, so lots are tiny. Some places are starting to fill in with higher density. I’ve seen new communities by Toll Brothers and D R Horton.

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I did a cash out refi before turning my primary into rental (should do at least 6 months before) since I want to lock in lower rate as primary. Might not apply to you anymore but just in case. Having HELOC on investment property is hard too last time I checked.


Agreed, granted when I got the equity line last year it was still deductible but with a rate of prime for me it is not too bad for emergencies or anything else as long as the plan is to roll it over into the first mortgage or I plan to pay it off quick. The nice thing about the equity line is that it is free as long as I keep a minimum balance in a checking and savings account. Peace of mind for a song is nice…