Should Someone Pay The Primary Residence HELOC or Investment Property HELOC First
It
always depends on the individual investor and the property in question – primarily
what the risk assessment is and if it meets one’s risk standards before investing.
There's an emotional decision and then there's a mathematical decision.
From an emotional standpoint, it is best to attack the
highest cost of funds first so cash flow is maximized. Often, the investment property's loan is smaller so it's best to focus on the primary HELOC
while paying the minimum amount on the investment property. Take all cash flow from
the investment and put it into the primary residence HELOC. Don’t separate funds
and attempt to pay both loans at once.
When looking
from a purely math perspective, attack the highest APR loan first, but for
safety reasons taking care of the homestead is the first and most important
step.