HELOC OR Cash-Out Against Primary Residence For REI?

[Mike Schorah]

Should I use a HELOC...OR...a cash-out refinance against my primary residence for the down payment of my first investment property?

Everyone always talks about getting a HELOC to fund an investment property, but I read an article that said that it makes more sense for homeowners who want to tap their equity to do a cash-out refinance because of how low rates are. The article said that HELOCs are floating-rate instruments, so they're less attractive to take on a floating-rate loan at a higher rate than a general low and a fixed rate.

My issue is that I don't want to pay $3,000 to do a cash-out refinance and I don't know how long it will take to get a deal (WHATEVER I define a DEAL as ;) ), but maybe I'm missing something here...

If you are approved for a HELOC and the value of your home goes down, will you still have access to all of the funds? (For example, you buy a home worth $150k. The value goes up to $200k and you've paid off about $20k of principal. You apply and are granted a HELOC for $50k. The value of the home goes down to $170k. Will you lose $30k of credit or will you still be able to have the $50k of credit?)