Turning PR into rental, have to pay off HELOC?

[Daniel B.]

Hello, My wife and I moved into one of our 2 family rental properties 2 years ago. We took out a heloc a year and a half ago and improved the property. We are now planning on moving this summer. We will rent out, not sell the property. I was under the impression HELOCs had to be paid off when they are no longer your primary residence. I read through the closing docs, I see where it is noted the property was a primary residence, but I didn't see a clause stating the loan had to be paid back if it is no longer our primary home? Does anyone have experience doing this? I would hate to call our credit union and get an answer we don't like if the forms we signed don't say we have to pay it back. Is this just like getting a better interest rate if you owner occupy a home for a year, and then move? Also, since the money was used to improve the property, can we continue to expense the interest if we don't have to pay the principal balance back even though it will no longer be our primary res? Any advice is appreciated! Thanks in advance.

[Joshua Fulenwider]

@Daniel B. I appreciate you exploring this.  Most people don't give it a second thought and simply move out.  Chances are if the credit union finds out this is your plan they can take several different approaches.  First, they could freeze the line (no additional advances) and keep all other terms the same.  Secondly, they could utilize an acceleration clause (demand the entire amount be repaid right now) as the loan was intended to be use against a primary residence only.  Third, they may put you on an amortized repayment immediately.  Or lastly, they may do nothing because they don't care.

I can not advise you one way or another.