Using a heloc to turn primary home into a rental.

[Sean Tharp]

Hello,

I am trying to get out of my current primary home and use it as a rental. The area I live in is a great rental area. I can longterm or medium term it. I know it will cashflow well as my rate is very low. I want to hang on to this home for these reasons - it is a great cash-flowing rental opportunity. That being said, I need the equity in the home to get myself into a new primary (growing family).

I spoke with a mortgage broker and he recommended that I try to hold onto my rate by using a heloc instead of a cash out refi to put a down payment on my new primary. Numbers wise, it seems to make sense and my rent would cover the morgage and the heloc payments, but I am still struggling with the mental side of things. Is this stupid? Would I be over-leveraging my new primary? Seems like a risky play.

I keep thinking that it might be safer to sacrifice the rate by doing a cashout refi and then use that cash for my new downpayment. 

Any thoughts would be appreciated. Don't hold back!

Thank you.