Higher Maximum Credit Limit Vs. Lower Margins on HELOCS

[Ryan Anderson]

Hi Bigger Pockets Community,

I've started the application process to open a HELOC on my primary residence with a couple of financial institutions to see what I can qualify for, and I'd love to get a little feedback from the experts on this community. Several of you have offered some great advice on what to prioritize on HELOCS, and I've been looking for a lender that can provide the maximum line of credit with an interest only payment option, but I'm curious how much I should care about the margin on my HELOC interest rate if I'm planning on using the HELOC as a short term tool to purchase properties and then pay back the HELOC once I'm able to refinance the property with a primary mortgage. Should I care too much about the margin if I'm getting a larger line of credit?

For example, one lender has pre-qualified me for their 90% LTV interest-only HELOC, which would provide me with a line of credit of $185,000 with a rate of PRIME + 1%.

A second lender has told me they would be able to go up to 95% LTV, with a line of credit of $219,000. But the interest rate here would be PRIME + 2.5%.

Would you opt for the higher credit line and the higher margins if the plan is to use the HELOC as a shorter term tool and not to carry balances for long periods of time?

Would love your thoughts and advice on this! Hoping to make my final decision today.