Question about HELOC with Primary Residence

[Zachary Blomberg]

Hi All!

I’m still relatively new to the real estate world, so this might be a simple question, but I appreciate all feedback.

I have been in my primary residence for about a year, and refinanced a few months ago. My appraisal was $18,000 higher than a year ago, so with my down payment i have about $40,000 in equity.

In the future I am interested in doing a HELOC to get started with my first rental property. My question is: if I wait until the market corrects to pursue this HELOC, will I lose out on the increase in home value? Does a lender use the appraised value on my current mortgage to calculate the HELOC, or do they conduct their own evaluation.

Thanks for your help!

Zach

[Danielle Wolter]

@Zachary Blomberg From my understanding (I'm sure someone will correct me if I'm wrong), the lender will use an appraisal to calculate the HELOC. So yes, IF the market corrects and your home value goes down, you will be able to pull out less equity.