HELOC as down payment

[Steve Francis]

Hello all,

I've been looking for my first rental property for almost a year now and have found one that looks to cash flow about $400 a month. I don't have the capital for the 25% down payment but have a 50k HELOC on my primary home that I could use. Does it make sense to use the HELOC as a down paymewnt and try and pay it off as quickly as possible? Any advice would be appreciated.

[Linval T.]

@John C S. - That's a good question. As per wikipedia's definition

A home equity line of credit (often called HELOC and pronounced Hee-lock) is a loan in which the lender agrees to lend a maximum amount within an agreed period (called a term), where the collateral is the borrower's equity in his/her house (akin to a second mortgage). Because a home often is a consumer's most valuable asset, many homeowners use home equity credit lines only for major items, such as education, home improvements, or medical bills, and choose not to use them for day-to-day expenses.[1] HELOC abuse is often cited as one cause of the subprime mortgage crisis