100% LTV HELOC...should I do it? #Notfinancialadvise

[Brandon Bell]

Hello All,

I have a duplex that I am house hacking and I just had it appraised for $425,000; meaning I have approximately $175,000 of equity in it. I was initially going to do a cash-out refinance and pull around $80,000 out, but I would have been going from a 2.5% interest rate to a 4.7%. A local credit union is offering me a 100% LTV HELOC at 10% fixed interest (5 Year Draw - 10 Year Repayment). They are also offering 90% and 80% LTV with slightly lower fixed interest rates.

I am planning on moving this summer so if I want to tap the equity using a HELOC I should do it sooner than later. If I get the HELOC, I would probably use it to help with the downpayment on my next house hack (assuming the numbers work out) and get my first Midterm rental. So essentially, my property would become a hard money lender for me lol.

I think it is important to note that this house hack is my only investment property and contains the majority of my wealth. I have been extremely blessed with the crazy appreciation over the last few years from covid, the town cleaning up my street, and a lot of local development. 

I've never really heard anyone talk about a 100% LTV HELOC, so I'm curious if others would jump at the opportunity or consider it too much of a risk.

Thanks!