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Can I Use My 401k or a HELOC to Cover the Equity Gap?
Yes to both, and Ryan has had clients use each one and stack them together. But they work differently and one of them has a trap that can cost real money if you do not see it coming. He walks through a real equity gap of $60,000 on a $475,000 home at 2.75% and runs the numbers two ways. The 401k loan lets you borrow up to $50,000 from yourself at around prime plus one with no credit check and the interest going back into your own account, but if you leave your job that loan comes due fast. The HELOC on a property you already own runs about $400 a month interest only on $60,000 at 8%, and even…
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