HELOC Question -- Primary Residence vs Non-Primary
Hi All, I currently own a single family home and am going to be adding an extra bedroom & TV room in the near future to this property to increase equity. After the rehab, I will want to get a HELOC or line of credit on the house and utilize the increased equity to purchase another property. From my understanding it is harder to acquire a HELOC or line of credit on a non-primary residence and my question is if I would be using this HELOC to purchase a house-hack/my new primary residence will that have an impact on my HELOC (On My First Property) or would it still be considered a primary residence even though I would be moving out and renting? Thanks for all the help.
Is it your primary residence now? Once the loan is "closed" (or in your case, opened, because you have the HELOC) you can do whatever you want=-the bank isn't gonna come knock on your door.
It is my primary residence now and that is great to know! Thanks for the feedback.
As long as you open the HELOC while still living in the property it won't be an issue!
@Darien Miller-Gowan, Yes you can take HELOC our on your primary to purchase new primary. But, I question is the juice worth the squeeze? You will need maybe 40-50k max to purchase new primary house hack. Are you able to do that with your house as is? Adding a room or 2 will be worth it from a post move out rental prospective, but I would not go converting garage into room. That will cost you twice as much as purchasing a new primary when it comes down to permitting + costs
Also, have you started looking to see how your primary will act as a rental? Ill send you some resources that will help.
Hi Ben, thanks for the information and feedback! I have already gotten a couple quotes that range me about 20 to 25K to convert the garage so I see it as a very cheap investment that will not only improve my rent when I move out but also increase the property value. From what I can tell, making this addition would add roughly 600 to 800$ a month in rent and therefore could cover my investment in the best case in 2 to 2 1/2 years. On top of that, I would secure a HELOC (as a primary residence) prior to changing my primary residence with more equity then if I did not do the addition. I will look into those resources but that is my thinking. Thanks again!