I want to take out a HELOC to purchase a short sale property in the new state to get something under market value.

You definitely are paying a premium for the convenience and using their platform. 

Hello all,My name is MarcAnthony, but all of my friends call me Marc for short, and I am in my third year of law school in CT.

Having said that, I have 3 families that are insured around the 3k annual premium mark, and others that are $1500-$1800.

Most companies have a minimum earned premium of 3-months for this type of policy but at least you can be covered properly until the work is completed and you have a tenant in place.I would call an independent agent and get some better options.- Casey

However, I would caution you that they are best when used for short term needs.   

Generally speaking, if you borrow 100K (70k for the purchase 30k for repairs/upgrades) what will happen is this: To close they will require proof of 1yr homeowners insurance to be paid, eliminating the need to escrow it because HML are short term solutions they will probably require it to be paid back within a year.

In that situation, if everything else checks out and they are just short of 3X the monthly rent, they might know someone who will do this for them.

The closing costs, insurance premium, legal, etc. was about $200,000 ballpark.

Reason being, once you gave a big fish on your hook, the time allotted to you to reel it in is short.