So you have taken the first step and invested in a property. You have done the needed improvements to the property and are now ready to pull equity out of it. You may be presented with a couple options to refinance this home including a HELOC or a Cash Out refinance. I suggest a HELOC (Home Equity Line of Credit) over a Cash OUT refi and here's why.
Let's say you pull out 100k of equity in a cash out refi at a 4% interest rate. You would be required to make those monthly payments based on that entire amount. Comparatively, if you use a HELOC for that same 100k you have more flexibility. This means you can use the money as needed (10k, 20k, etc) and pay only interest on what you use at the time. Think of it as having a credit card but with a much better rate. A Cash out refi is a fixed method, while a HELOC is variable and will give you flexibility.
