Anybody ever heard of using a HELOC to pay mortgage for a year?

2 Replies

Hi all!

So I have an interesting situation going here and I have to get creative to make something happen or I''ll be stuck in the paralysis by analysis phase forever! I will try and sum up my plan as quickly as possible, bear with me!

My wife and I currently live with my mom. We own a condo free and clear, that we rent out, at a net profit of about $600 a month. We are living here because we are both going back to school in the fall, and need to downgrade our work schedules a bit in order to manage everything. So in other words we wont be making much through the next year or two, and are eager to get an investment property going/ move out of of my moms. We have about $25,000 in cash plus the $165k in equity in our condo. Most people I've heard of, using a HELOC, will use it as down payment on the new house, but I'm thinking of instead using it to pay our mortgage for a year or so while we're in school. That way instead of putting a giant balance on the HELOC right away, we are putting smaller balance on it every month, with the opportunity to use any leftover funds to pay it off as we go so that it hopefully doesn't get out of control. The single family houses we are looking at are 2 bed/ 1 bath priced from $180k - $215k and we will not buy unless we are sure they will cash flow etc. (South Minneapolis).

Anybody say go for it?? Or do you have any other ideas for us that may work better?

Any input will be much appreciated for these two novice investors! 

Many thanks, 


@Joe Einbinder

Basically your heloc is a gigantic credit card... so what is your exit strategy to get out of your debt? Whether you borrow money to pay a mortgage, school loans, replace lost income, etc you are still borrowing money and have more expenses than income. If you are comfortably sure (to yourselves) that you won’t stay that way, then go ahead. Otherwise, be careful of digging yourself a hole that you have no way of getting out.

As with any debt, you want to be paying the least amount of fees and interest

@David M. I appreciate the response first of all. If I needed to sell the home and work to pay off the HELOC for a few years, that would be worst case scenario, but like I said, I won't buy it if I don't have a pretty certain idea that it would cash flow. Plan is to just start renting it out in a year or two once we have finished school and are back to making more money. At that point, we can move to a new house or back in with my mom. I guess I have a couple different ways of exiting if I had to.