Finance
A Minnesota property owner with 40% equity in their home wants to purchase a rental property. They could use which strategy to leverage their existing equity without selling?
AThey must sell their home first to access the equity
BTake a cash-out refinance or HELOC on their home to fund the rental property down payment✓ Correct
CUse the equity as collateral for a commercial real estate loan only
DMinnesota law prohibits using primary residence equity for investment purchases
Explanation
Homeowners with substantial equity can access it through cash-out refinancing (getting a new larger mortgage and taking the difference in cash) or a HELOC (home equity line of credit). This liquidity can be used as a down payment on investment properties.
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