HELOC Question -- Primary Residence vs Non-Primary

[Darien Miller-Gowan]

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.

[Jennifer Dixon]

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.

[Darien Miller-Gowan]

It is my primary residence now and that is great to know! Thanks for the feedback. 

[Tanner Pile]

@Darien Miller-Gowan 

As long as you open the HELOC while still living in the property it won't be an issue!

[Ben Einspahr]

@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.

[Darien Miller-Gowan]

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!