Primary Residence - HELOC - PMI - First Deal

[Andrew Simms]

Hi all,

I have been a BiggerPockets lurker for quite a while. My wife and I are looking to get into buy and hold rentals in the Southeast. Our plan is to use the BRRRR strategy with a HELOC on our primary residence as our source of funding. HELOC on primary, buy and rehab, refinance (cash-out), pay off HELOC, repeat.

We have saved up quite a bit of cash, nearly enough to fund the types of properties we are looking at; however, we feel that the HELOC would allow us some cushion from the standpoint of not exhausting our cash and in case things went south, we could certainly pay back the HELOC. If we were to use our cash to fund the deal, we would run the risk of something going bad and not having the cash to cover ourselves.

I have a few questions regarding the HELOC and PMI. We have been paying extra towards principal on our home and due to market appreciation, we are getting a reappraisal which should conservatively give us about $100,000 in equity. With that appraisal, we would be below the threshold of 75% LTV to get rid of PMI.

1. If we take out a HELOC, would that bring back PMI immediately, not until we use it to fund a deal, or never? For instance, if we found a HELOC for over 80% (say 90%), get that setup, but not purchase our first deal for another 6 months, would PMI come back?
2. If we then do a cash-out refinance (after seasoning) to pay back the HELOC, would PMI go away again (assuming we are below the 78 or 80% LTV threshold)?

Thanks BiggerPockets (and users) for all the useful tools/advice.