Seeking Advice on HELOC Dilemma

[Kwok Wong]

Hello BP community, 

I am reaching out for advice on a financial decision I made that I am now realizing was a mistake. I used a HELOC on my primary residence to purchase a long term rental investment property. Subsequently, I took out another HELOC on the rental property itself and it has not been used.

Now, I understand that HELOC should be used for short term financing purpose and I am concerned that I may have made a misstep. 

What are my options for correcting this situation? Should I consider refinancing one or both properties? Are there any other strategies I could explore?

I am currently house hacking the primary residence with an interest rate of 3.75%. The rental property is entirely funded by the HELOC with interest rate of 3.6% (10 year withdrawal, 20 year repayment) and no mortgage on it. 

Thank you in advance for any input. 

[Kwok Wong]

Quote from @Malcomb Stapel:

Quote from @Kwok Wong:

Quote from @Malcomb Stapel:

@Kwok Wong it should be as simple as contacting your preferred lender and telling them you have a house you are ready to finance. They will send an appraiser, you will have the option of financing up to 75-80% of the value. Take the money and pay back your HELOC.

 Hi @Malcomb Stapel, thank you very much for your response. I thought about refinancing the primary residence to a fixed-rate mortgage to pay back the HELOC and paying down the HELOC early. I was wondering if there is another better options available.

That would be a one trick pony. If you do a cash out refinance on the primary, you won't have a HELOC left to buy any more properties. If you finance the second property with a traditional loan, you can pay back your HELOC and use it again.

 Got it. I guess I do not have much options at this point. Thank you very much. Really appreciated.