HELOC to replace my current mortgage

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I have recently purchased a condominium as my primary residence in August 2018. I am on a 30-year fixed with 4.75% interest rate. Can I replace my current mortgage with a first lien HELOC? I tried a few times to obtain a HELOC, but declined due to my credit score of around 650 and most HELOC lender require a 720 FICO or more! I live in Falls Church, Virginia. Anyone can recommend a lender which they accept borrower with an average FICO score?

[Chris Higgins]

I agree with you @Thomas Rutkowski

@Frank Chamanara

Here is my 2 cents on this topic. A few years ago I refinanced the mortgage on my primary residence into a 1st position lien HELOC and definitely don't regret that decision. The decision point for me had less to do with the interest rate of the mortgage being fixed vs variable (and slightly higher) rate of the Heloc, and more to do with the flexibility I got from just having a single lien in the form of a Heloc. In my case, I had extra saving lying around basically making no interest (waiting for the next big investment or an emergency) and I also could afford to pay a lot more than the min payment due on my primary mortgage. However, I was always hesitant to throw a bunch of money at my primary mortgage because I wanted easy access to my cash for when a good opportunity presented itself. But once I switched over to just having a HELOC I then felt comfortable very aggressively paying down the HELOC balance on my primary residence (thus minimizing overall the interest I was paying even though the interest rate on my HELOC was higher than what it was on my old mortgage ). And if or when I needed back a significant amount of money, I just pulled from the Heloc. So now fast forward a few years and the HELOC on my primary has been paid down to zero and is still available for use.

So for me, this made sense based on my financial situation at the time. However, this may not be best the strategic for you if you have little or no savings and can't currently make significantly more than the min mortgage payment.

So, refinancing your primary mortgage into a HELOC is not going to be the best strategy in all cases. In some situations I think it's a no-brainer, in some cases I would advise against it, and other times it's a bit of a toss-up. It really comes down to your specific financial situation and your level of discipline.