How to buy 2nd home?

[Casey Botts]

Hi, 

I currently live in Novato, CA where we bought a home 3 years ago that has gone up quite a bit in value. I have no experience in real estate. We are considering renting it out and moving out of state for a year to try something new. We currently have a 15 year fixed and owe 190k on it. Purchase price was 462k and its valued at 690k (zillow.) Renting will give us +$1000 cash flow/month.

We currently have 25k in savings acct, and want to buy 2nd home for around 325-450k. 

What is the best way to tap into equity to get enough money for down payment on 2nd home? We are looking at a down payment of 20% to avoid PMI, so roughly 70k-90k in cash to put down, plus potentially another 50-75k for improvements if needed.

I would rather not refi our first home. So options would be HELOC or Home equity loan, correct? How much should I put down on 2nd home, which will be a 30 year mortgage? Are rates low enough whereas PMI payments wouldn't really matter?

Thanks!