How do interest rates work on a home equity line of credit? What’s the difference between a fixed rate HELOC and a variable rate HELOC? And which one is better for investors? That’s the topic of our first question on today’s Q&A episode!
On this episode of Investing in Real Estate, I’m taking a swing at three listener questions on HELOCs, non-recourse financing, and what type of loan to get for a duplex. Join me on today’s show to hear my answers to your questions!
On this episode you’ll learn:
- The difference between variable rate and fixed rate HELOCs.
- How a non-recourse loan is used.
- What kind of loan you should consider when buying a duplex.
The Difference Between Variable Rate and Fixed Rate HELOCs
Most HELOCs that you will find today have a variable rate, meaning the interest rate can rise and fall based on market conditions. A fixed rate HELOC, however, allows you to lock in your balance at a particular interest rate, protecting you against market fluctuations. Fixed rate HELOCs are harder to come by, but they do exist. Both types of HELOCs are fantastic, especially if you’re leveraging your equity to buy performing assets. While a fixed rate is certainly preferable, I would still get a HELOC at a variable rate. One tip I can offer is that you is that once you’ve secured the line of credit, you can always ask your bank if they are able to convert your variable rate HELOC to a fixed rate.
How a Non-Recourse Loan Is Used
If you’re not familiar with a non-recourse loan, see my in-depth video here. A non-recourse loan is used in many scenarios, since it is based on the merit of the asset. At Morris Invest, we tend to use a non-recourse loan with self-directed IRAs, as well as for our international clients. A non-recourse loan is also great for those with lower credit scores.
What Kind of Loan You Should Consider When Buying a Duplex
The world of financing for real estate investing is incredibly vast. A lot of options are available, but here is what I would consider. First, a conventional loan is always a good option, and right now you can get a pretty decent rate. If for some reason that doesn’t work for you, I’d check out non-recourse financing. If your duplex needs a ton of renovation, check out construction loans.
Ask Me a Question at morrisinvest.com/clayton
Book a Call with Our Team
Want to try microdosing? Visit MicrodoseGummies.com and use code INVESTING for 30% off + free shipping!
JoinCrowdHealth.com Use promo code INVESTING to get your first six months for $99/month!
The Power of Non-Recourse Financing for Building Wealth
Download the FREE Financial Empowerment Bootcamp
Download the Freedom Cheat Sheet
Subscribe to Investing in Real Estate on iTunes
Find Your Financial Freedom Number
Subscribe to the Morris Invest YouTube channel
Like Morris Invest on Facebook
DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning, at NO additional cost to you, I may earn a commission if you click through and make a purchase and/or subscribe. However, this does not impact my opinion. We recommend them because they are helpful and useful, not because of the small commissions we make if you decide to use their services. Please do not spend any money on these products unless you feel you need them or that they will help you achieve your goals.
Ready To Build Passive Income Through Rental Real Estate?
Ready to talk about your goals? We're here to show you the tools and teach you the process to begin earning legacy wealth for you and your family.