Real Estate Investor · Atlanta, GA · Member since 2016 · 286 posts · 67 votes
Hi, Everyone
Could someone help me on answering what will happen to my HELOC if I do the following?
I have a house A that is my primary residence. I recently applied for a HELOC on it, with the total amount of $100K. Now, I want to buy a house B and want to move to the house B as my primary residence and rent out house A. However, I don't have cash for downpayment on house B, so I decide to use the HELOC from house A to pay the downpayment ($30K) for house B. My question is: Will the bank that opened the HELOC for me on house A allow me to use the money from the HELOC account to pay the downpayment and change the house A, my original primary residence, into a rental? What will happen to HELOC if I change it to a rental?
If they find out they could call the HELOC due, but then maybe not. Read the agreement and see what it says. HELOC's are bank and state specific. If you don't have cash for the down, how are you going to qualify for the Debt to Income Ratio for the second house? When you fill out the 1003 (loan application) you are filling it out subject to perjury, so be honest no matter what.
Ken
Thank you for the info. My DTI is not very high and in the application process, I was planning to pay the down using HELOC. I will read the documents more closely to see what my bank will do.
Thanks!