HELOC to finance down payment

[Yari Vargas]

Hello All! I've been house hacking my 2 family home, for about 2 years. And now that I have the hang of managing the property I feel ready to take my next step and invest in a 2nd property. I am looking into using a HELOC to finance the down payment for the 2nd property vs Refinancing (Since i would avoid closing costs). Is there any reason that a HELOC would be a bad move? My intent is to invest in a buy and hold property in NYC, Specifically the bronx, since I know the market and it is where i currently have my 1st property. Thanks for your help!

[Andrew Postell]

@Yari Vargas using a HELOC for purchasing properties is a very common strategy. There is one really important item to have when you use a HELOC though - a method of paying it back! A HELOC is a variable interest rate...which means your payment could become higher. AND after 10 years, a HELOC "matures" into something else entirely....which will also carry a higher rate. If you use one, just have a plan to pay it off in the near future so you don't find yourself stuck in something that you didn't want to be stuck in. Hope this helps. Thanks!