All Forum Posts by: Brittney Wright

@Meg K. my lender does not charge closing costs for the HELOC and yes there will be closing costs for the cash out refinance and most lenders will only allow you to borrow up to 80%. So given you have at least 20% equity from the down payment you made with the funds from the HELOC + additional equity that was either already in the property or from renovations, you should have enough equity to pay back the HELOC and pay closing costs.

@Taylor Dasch I am leaning toward your recommendation. So to be clear, you would do a cash out refinance on the investment property after closing and pay off the HELOC?

 @Meg K. I would pay it back by doing a cash out refinance on the investment property to pay back the HELOC. Then, you can continue to use the HELOC for other investments. The rental income would be used to pay off the new refinanced mortgage on the rental.

Hi, All!

I just applied for a HELOC with my credit union that is offering a 5 year draw, 15 year repayment at a 5.49% fixed rate. 4.99% fixed rate for a 10 year repayment. I went ahead with the 15 year repayment. This is my first investment property and first time using a HELOC. I would like to know how others have used a HELOC for just a down payment on an investment property. Is it best to refinance the investment property soon after purchasing to quickly pay back the HELOC? Obviously 30 yr investment mortgage rates are much higher than the HELOC but I am not sure I should keep 3 loan payments (primary residence, HELOC and investment property). Or do people use the full 15 years to pay down the HELOC and keep 3 monthly loan payments? Paying on a HELOC means I am paying interest on my equity which somewhat does not seem smart. Just looking for what has worked for others. Thanks