Inquiring information and advise

San Jose, California
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Inquiring information and advise

Adalberto Ramos
Member since 2026 · 2 posts · 2 votes

My goal is to begin house hacking in the Bay Area within the next two years. But until then I am paying off substantial debt hence the 2 years goal. What's putting me in a bit of a financial and strategic bind is my parents' home.

My parents are retired and are considering taking out a $150K HELOC. The home is worth around $630K, they owe roughly $310K on the mortgage, and the current mortgage rate is 3.25%.

The idea is to use the HELOC to pay down our debts, make some renovations to the home, and possibly use the remaining funds to help position me to purchase a duplex or triplex and start house hacking.

If you were in my position, what would you do? Wait until all debt is paid off then consider the HELOC plan or move forward with HELOC now. I've already ran the numbers with my debt and the potential cost of the monthly payment for the loan and I would be able to afford it but funds would be tight. Are there any lenders or experienced investors who have advice on how to strategically approach this?

I know this is a tricky situation, but any and all advice is helpful. Thank you!

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  • Janice Carter
    Real Estate Broker · Atlanta · Member since 2024 · 1k+ posts · 607 votes
    3mo

    @Adalberto Ramos I may be missing something but I am a bit confused about why your parents' debt or home is preventing you from buying a home. If I were in your position, I would be very cautious about using your retired parents' home as collateral to pay off your debt or finance your investment goals. You should focus on paying down your own debt first and then purchasing when you are in a stronger financial position.

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    • Adalberto Ramos
      OP
      Member since 2026 · 2 posts · 2 votes
      3mo
      Quote from @Janice Carter:

      @Adalberto Ramos I may be missing something but I am a bit confused about why your parents' debt or home is preventing you from buying a home. If I were in your position, I would be very cautious about using your retired parents' home as collateral to pay off your debt or finance your investment goals. You should focus on paying down your own debt first and then purchasing when you are in a stronger financial position.


       Hi Janice thank you for your professional advice. I will take more time to reevaluate my decisions.

      0Reply
  • LaTarence Dunbar
    Lender · Washington DC · Member since 2026 · 78 posts · 21 votes
    2mo

    Moving forward with the HELOC now is definitely the smarter strategic play. Waiting two years while paying high interest on existing debt wastes cash flow that could be going toward your house hack down payment.

    Here is why executing the HELOC today works in your favor:

    1. Consolidating High-Interest Debt: By using a HELOC to pay off high-interest consumer debt, you immediately lower your total monthly out-of-pocket expenses. This improves your Debt-to-Income ratio faster than paying debt off incrementally.
    2. Preserving Their Low Rate: A standalone second-lien HELOC sits quietly behind your parents' 3.25 percent primary mortgage, so they keep that incredible 1st mortgage rate intact.
    3. Flexible Access to Capital: With 320,000 dollars in equity, a 150,000 dollar HELOC puts their combined loan-to-value around 73 percent, which is well within standard guidelines. You only pay interest on what you draw, leaving the rest on standby for your future Bay Area down payment.

    I can help run a quick scenario for your parents to show the exact monthly savings and rates. What average interest rate are you currently paying on that debt?

    0Reply
  • Alfath AhmedBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
    2mo
    Quote from @Adalberto Ramos:

    My goal is to begin house hacking in the Bay Area within the next two years. But until then I am paying off substantial debt hence the 2 years goal. What's putting me in a bit of a financial and strategic bind is my parents' home.

    My parents are retired and are considering taking out a $150K HELOC. The home is worth around $630K, they owe roughly $310K on the mortgage, and the current mortgage rate is 3.25%.

    The idea is to use the HELOC to pay down our debts, make some renovations to the home, and possibly use the remaining funds to help position me to purchase a duplex or triplex and start house hacking.

    If you were in my position, what would you do? Wait until all debt is paid off then consider the HELOC plan or move forward with HELOC now. I've already ran the numbers with my debt and the potential cost of the monthly payment for the loan and I would be able to afford it but funds would be tight. Are there any lenders or experienced investors who have advice on how to strategically approach this?

    I know this is a tricky situation, but any and all advice is helpful. Thank you!


    Take the HELOC money and start doing BRRRRR and flip deals in a another market besides CA where there is growth potential and you can connect with a good team of realtors, contractors, lenders, and property managers.

    Get to know the market and the areas. Ask for a neighborhood map if they have it. Meet contractors, go visit the city and buy an off-market deal. Get an inspection and 2-3 quotes on the property lbor + material. Get lowes business card and order appliances and other items you need. 

    Plan beforehand if you want to sell and make $20k to $30k profit or re-finance and leave some money in deal and get the rental fully stabilized and collect rent long term.

    [email protected]614-802-5698
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