Best Way to Pull Equity out of Primary Residence for Down Pmt

[Eric Jones]

Hello,

I live in Rochester, NY and currently own one rental property, and will own my primary residence free and clear within about two years. My current house would make an ideal rental for several reasons, so my goal is to rent it out once it is fully paid off. But I would also like to pull some of the equity out of it to make a down payment on my next house. So what I'm curious about is the best method to obtain this cash for the down payment. Below are some of the numbers and options that I'm considering:

Appraised value: $110K (will have 100% equity)

Cash needed for down payment: ~$40-50K

Currently have a $10K HELOC

1. Cash out refi (owner occupied) - if I were to obtain this financing while living in the house and then move after 6 months to a year of seasoning, I could lock in an owner occupied rate on a (future) rental property, right? 

2. Cash out refi (investment property) - don't see any issues with this, but I'd pay a higher rate.

3. Get a home equity loan - could I get a home equity loan on a property I'm currently living in, then move in 6 months to a year and carry the loan on the rental property? I like this option (if it's possible), because I could lock in a fixed rate with low/no closing costs. Or, can you get a hoe equity loan on a rental that you own free and clear?

4.) Get a larger HELOC - if I were to get a larger HELOC while living in the house, could it stay open once I moved and was renting the house? Not sure that I would want to have the variable APR with this option, but like that there would be no closing costs.

5.) Other ideas?

Thanks for reading and I look forward to hearing your feedback and any other ideas that I may not have thought of!

-Eric