Making HELOC payments
Looking to get my first property in the coming months, and a HELOC is my best financing option. Looking for a little advice on how to choose a HELOC based on making payments.
I can get a $70k LOC with a 95% LTV heloc from a local credit union. Payments at 1% would be $700/month. That seems obviously too high to lump into future rental income, so I'd want to pay that heloc back ASAP (for that reason, I'm mainly considering a BRRRR or buy and flip). Are there creative ways to make HELOC payments that are too high to lump into a deal? Can you use money from a HELOC to make those payments? For example, can I take out $70k, but set aside $8400 (and only use $61,600 on the property) to make the first 12 months of payments until I can flip and sell or refi? I also have $10k sitting aside, earmarked for investing. Would it be (un)wise to use that $10k to make the payments for up to a year?
Another option would be to take a 90% LTV loan from a different credit union that is interest-only. Much more affordable payments and I could likely lump those into the deal.
Either way, I'd be wanting to pay the LOC back within 6-12 months to free that money up and move onto the next deal.
Thanks for any thoughts. I'm a newbie, so happy to receive any thumbs up, thumbs down, and/or suggestions that will move me forward.