Paying off primary rental mortgage with HELOC

[Micah Starbuck]

I'm looking to access equity in one of my rental properties to make another rental purchase.

As things stand now, I owe less than 50% of what it's worth with a 28 years left in a fixed rate 30-year loan.

Here's where I need feedback:

I can get a HELOC as a 2nd for Libor +5% or as a 1st for Libor +3.5%.

I was thinking to use the initial HELOC to pay off the primary mortgage then go back to the bank and ask to extend the HELOC to 80% LTV and reduce the interest rate to the lower rate since it would then be the 1st lien.

Any feedback (positive, negative or otherwise) would be appreciated.  Thanks!

[Steve Vaughan]

It sounds good in theory, but I haven't done it because of HELOC small print. Used to be anyway, the bank can freeze or call due your credit line at about any time for about any reason. Ask for a sample or search online recorded docs for a HELOC and study ALL the language carefully @Micah Starbuck