HELOC for investment capital concerns!

[George Baal]

Purchased a home during the pandemic, value has gone up roughly 2.5(estimating), believe i have enough value in a HELOC to get a down payment on a second home.. is it a wise decision to add that to my plate then rent the first house for mortgage payment+? OR should i avoid the HELOC all together and look for capital else where..?

[Dale K Poyser]

I would not recommend a HELOC or HELOAN unless both are at fixed interest rates. I did get a HELOC on my primary and it was fixed, so they are out there.

If you do, keep the balance low and take advantage of the zero interest balance transfer option on credit cards. As long as your credit is good you, if your HELOC rates go up, you should be able to rinse/repeat that "0% balance transfer" option every couple years until the debt is paid off.

There are alternatives out there as well

Loan on your 401k or IRA

Loan on your stock account

Down payment assistance programs that provide all or some of the downpayment money. (you may or may not qualify since you already have a primary)

Private money loan.

Good luck, but def avoid variable rates right now.