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One of the best ways to rapidly build your real estate portfolio is to use the power of leverage. And if you own your primary residence, taking a loan based off of the equity can be immensely useful. There are a few ways to utilize this strategy, and many of you have asked whether a home equity loan or a HELOC is a better strategy.
On this episode of Investing in Real Estate, I’m sharing my personal experience with HELOCs and home equity loans. I’ll discuss which financial product I prefer, and how to shop around for the best deal. Don’t miss episode 174 of Investing in Real Estate!
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Home equity loans and home equity lines of credit are similar in that they both allow you to borrow against the amount of equity in your home. However, the two financial products have some main differences you’ll want to consider.
A home equity loan gives you access to one lump sum of money. This is a fairly traditional loan. The bank looks at the value of the home and gives you a loan in one amount.
A home equity line of credit, or HELOC, works a little differently. A HELOC is a revolving line of credit, meaning it works similarly to a credit card. A HELOC can typically be used for around ten years. It has a low introductory rate, and uses simple interest.
Personally, I like to employ the strategy of using a HELOC because it is repeatable and reusable! It can be used like a traditional checking account; you will even be issued a check card and a checkbook.
On today’s show, I’ll discuss more of the intricacies of home equity loans and home equity lines of credit. I’ll share how to get the most bang for your buck at the bank, and when each financial vehicle might be appropriate. It’s all here on the Investing in Real Estate Podcast!
If you’re ready to begin building a passive income through rental real estate, book a FREE call with our team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family.
On this episode you’ll learn:
- How can you find a business checking account without fees?
- What are the benefits of working with a local bank?
- What is a typical introductory rate on a home equity line of credit?
- How does simple interest work?
- And much more!