HELOC on Rental Property

[Jake Williams]

My wife and I are nearing completion on the renovation of our primary residence in Eden Prairie Minnesota. We planned to get our home reappraised and take out a HELOC against the equity (~$100k). I am having conversations with lenders about HELOC rates and I am hearing that they require us to sign an Occupancy Statement that agrees that the home is and will continue to be our primary residence. I can't in good faith sign something like this with my intention being otherwise. We could pivot and go for purchasing a rental property next instead of making our current home a rental, but that would change our trajectory and probably take some convincing on my wife's end.

Is this a one off for this bank or is that common for the HELOC loan product? We may need to look more seriously at a cash out refinance in our situation. How do closing costs compare between a HELOC loan and a cash out refinance? We refinanced in April of 2020 when rates were dropping like crazy and our plan was for a HELOC, so another refinance would be costly from a closing cost standpoint.

Thanks for any advice!