Question about an equity line of credit option pulled from my 5-unit.
First time exploring my options with equity. I need about 40k for improvements on another property that I own. I just closed on a streamline residential refi, saving 1.5% but the bank denied my equity line because my building is technically commercial. The place is worth a good amount. I have 73k left on my mortgage but haven't had an appraisal done yet. In 2006 it sold for 230k and since i bought it in 2010 ive made vast improvements on it. should give you an idea of the value in it. 

The 2nd bank, the one im currently dealing with is basically offering me a second mortgage, Prime+1(4.25%), variable, 5yr draw/15yr payback, i cover closing($2500), and no prepay penalties. 
Now, from my standpoint I see this as a good deal except for the closing cost. The variable rate kind of makes me nervous but it's something I'll have to manage.


So, to the experienced investors out there, does this sound good?
If so, im considering taking a larger draw for future downpayments.
Thanks in advance.

Also, if there's a more appropriate sub to post this question on please let me know
[{"id": "csewluw", "text": "a few points:\n\n* 1) from a commercial perspective, \"good\" should be a measure of how much the subject property nets you on an annual basis. since you've not included any detail on the income or expenses involved, it's hard to say if this is a good deal. \n\n* 2) it sounds like you're referring to a home equity type of product, as opposed to a commercial mortgage. i would just caution the use of this type of loan on a non-homestead property. at least in Texas, this is not permitted and could subject you to a default on the loan (also possible fraud concerns if you're representing that this is your homestead to the lender when it is not). \n\n* 3) if you are referring to a home equity loan, you might get a better response on competitive rates and terms from r/realestate. rates for commercial and consumer notes vary, with commercial typically being higher than consumer mortgages. ", "replies": [], "depth": 1}, {"id": "csezfuj", "text": "I'm no expert on the matter and do not follow it closely enough, so I would do a lot more homework on the interest rate environment before signing up for a floating rate deal. Figure out the details - the peg rate, any caps and floors etc before signing up. You have to think about your repayment timeline compared to what you think rates are going to do.  \n\nAll signs are pointing to rising rates in the near future...  ", "replies": [], "depth": 1}]