Moxie wrote:My thanks to each of you. I've taken notes on your posts and am researching. I had no idea it was possible to get a HELOC for 1.99% I was happy with Schwab's 3.99%
If I can do the HELOC from PenFed and take out $ to pay for both homes, sounds like that would prevent me from continuing to depreciate the 2nd rental home. I suppose I need to figure out how much that depreciation is helping me.
Perhaps it would be wisest to me not to try and double dip. IOW, maybe I should just concentrate on paying off my home and leave rental alone at 5.5%--after all, that's all tax deductible anyway and I keep the ability to depreciate.
First and foremost, if you have the available funds to do so, you should pay off the rental asap as well, not keep it just for the tax deductible nature of the interest.
Secondly, the Penfed loan you are considering is a Home Equity Loan (HEL), not a Home Equity Line of Credit (HELOC). From my understanding, if you pay down a HELOC to $0, you can go back and reborrow up to the limit you are given, whereas if you pay down a HEL to $0, that is it - if you want to go back to the well, you need to apply all over again.
Thirdly, you might not get a HEL at that rate for your rental property. I believe it is for primary residence only and is capped at 70% LTV in FL (which, from what I am reading from your posts, you are well under).
Finally, I believe you can borrow all the way up to the 70% LTV on a cash out HEL, in which case you might be able to pay down part of your rental as well. But beware that the HEL will need to repaid in full in 5 years.