You take the $125k you’ll have left after paying off $40k and put it in a 12 month CD.

Your equity equals how much “cash” you would have left after paying all debt on the property, whether it a 1st or 2nd mortgage, a lien or a heloc doesn’t matter

@Quiche LynnIf a home is in foreclosure the options are to work something out with the lender, pay them the amount that is past due or file bankruptcyHow they get the money to pay the lender what is owed can be from any source, but unless that lender is brought current or has some type of arrangement they typically do not stop foreclosure

Hi Zak-Great question.It sounds like your credit union is offering you a Home Equity Line of Credit as they do not expect principal payments and your primary bank is offering you a Home Equity Loan.Personally, I don't like having to pay on an equity loan unless I use some of it and only pay on the part I use.Although, this is a personal decision for you.If you make investments that provide enough cashflow to pay the principal and interest to your primary bank on the equity loan it doesn't really matter to you as others are paying it.Another consideration is the amount of dry powder available to invest.

I pay off principle of the mortgage around 13-14K a year and expect it to be an amazing long-term, cash flowing rental.

Right now it's an average of about 6.3%.Any suggestions on asking for a cap, how to incentivize without a % and any other related issues I should pay attention to?

For me after I get those numbers then I decide how much I can pay for the property to make the profit I want.

My intention is to use the insurance claim funds to pay off the mortgage on the rental property.

Landlord policy's have gone way up because most carriers are no longer writing landlord policy's in Texas because of the billions of pay out due to hail storms. https://www.restoremastersllc.com/hail-damage-statistics-in-...So, supply and demand of course push's up prices. 

We have the capital to pay for entire house + renovations with cash as well.