HELOC Questions on Balances & Liability Mitigation

[Patrick Lindsey]

A little background: I have two HELOCs on 2 of my 4 rentals. I'm debating whether or not to consolidate the debt from one HELOC (currently at 6.25% APR) to the other which charges less interest (4.75% APR). I've heard its always good to have debt on a property to maximize your returns through leverage (smartly of course) and to show that the property is encumbered by debt in the case of incident that exposes you to liability.

If I consolidate the debt under one line it will save me about $400 a year in interest payments that I can put towards paying down the principal faster (which I guess may save a little more in interest every year as well) and then get positioned for the next deal that much quicker. $400 a year isn't exactly a life changing number so depending upon your feedback I could go either way.

1) Has anyone ever heard of a bank canceling a HELOC for not having a balance on it for a certain duration?

2) How do lawyers determine the outstanding balance on a HELOC if they are looking at whether its worthwhile to go after the landlord or not?