HELOC and then use Refi to cover it?

4 Replies

Hi All,

This is my first post so be easy on me =)

Does it make sense to get a HELOC on the primary home and then get a Refi on an investment property to pay it off? I am currently holding two properties (one primary, one investment) and both of them have about the same amount of equities. I am researching to buy another investment (haven't found any yet) and would like to use a HELOC for funding. As everyone knows, getting a HELOC on the investment property is close to impossible so I will have to use my primary home. My problem is, I like everything about HELOC except for the variable rate. So after a deal is done, I am thinking to get a fixed rate Refi on the investment property and then use the money to pay off the HELOC. Am I being too conservative here? Any comments?

I use a HELOC on my primary residence for investing. But, with your situation, why not just refinance the investment property right now? Seems like you're adding an extra step if the plan is to only pay the HELOC off.

Knowing me, I'd probably refinance the investment property AND use the HELOC to make purchases :)

Thanks Mehran. I am getting a HELOC because I don't know how much I will need and most importantly, when I will need the money. I haven't found anything yet so having a HELOC on the side would make sense. Problem with Refi is that I will have to pay for the interest on the money that I am not using.

I think it makes perfect sense. I've done a very similar thing- used my heloc to get into a property quickly and with cash. I should soon be able to refi and pay the heloc off. The heloc rates are great right now, even though they are variable. And mine had really minimal fees to set it up. I like not having a loan on my house, so my rule is to only use that heloc short term for things that will definitely make me a good profit.

Thank you for your response Jean. It feels good to know that others are already doing it.

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