HELOC as 6 Month Reserve
Hello All,
I was looking through the forums and did not see any post matching the information for which I am searching--I apologize if this topic has already been covered and I just overlooked it. And thank you in advance for any advice you may have.
I am working on acquiring my first investment property (hopefully a fourplex) and want to have money and financing in place for when I can find/create a good deal. My wife and I own a home in California (SF Bay Area) which has appreciated substantially in the last four years.
We have a little over 80k saved and spoke with a lender who approved us for over 400K conventional loan. The limiting factor for our investment is the 6 months reserves required for our current mortgage and the mortgage of the investment property.
The lender recommended opening a HELOC for the reserves. I am in the process of obtaining a HELOC for 150K which will put the LTV of my primary residence at about 66%. So I have two questions:
1. Is it a good idea to open a HELOC to cover 6 months reserves for PITI?
2. Should I focus on using only the cash I have for the investments or utilize the HELOC as well?
I don't mind being aggressive if the deal makes sense, I just don't want to overextend myself with my primary residence. Additionally, if I can use the funds for multiple deals that make sense, I would be open to that as well. Unfortunately, house hacking my primary residence is not a good option for me due to my family's safety, my profession and the size of our house.
Thank you again for your help.