Use cash or heloc first?

[Pete B.]

We were planning on buying another house to move into and rent out our current home. Our home has about 200k of equity and will cash flow around $1100 a month covering most of the mortgage on the new house. We want to live in the new house for a year, then move and rent that one out.

We have enough cash for down payment and a little left over to cover a couple months living expenses. But we’re thinking to do some updating on our house so it’s bulletproof for another 10 years.

We could get an over 100k heloc at 1.9% for the first year. So we’re debating on taking advantage of the heloc while we can still get one, and since interest rates look uncertain for the future. Any thoughts on whether to use the cash first, or heloc? Thanks

[Jason G.]

Originally posted by @Pete B.:

We were planning on buying another house to move into and rent out our current home. Our home has about 200k of equity and will cash flow around $1100 a month covering most of the mortgage on the new house. We want to live in the new house for a year, then move and rent that one out.

We have enough cash for down payment and a little left over to cover a couple months living expenses. But we’re thinking to do some updating on our house so it’s bulletproof for another 10 years.

We could get an over 100k heloc at 1.9% for the first year. So we’re debating on taking advantage of the heloc while we can still get one, and since interest rates look uncertain for the future. Any thoughts on whether to use the cash first, or heloc? Thanks

Just a little confused on what your options are. You are thinking of taking out a HELOC and using the HELOC on what exactly? Is the question to use a HELOC to update the house or the cash you saved up for a down payment on a new house? If that is the case then if it was me, a HELOC on the house to do the updates and save the cash for the down payment. Though definitely ask yourself if you plan on renting it out are updates necessary?