Home Equity Line of Credit-Used a lot of money on it!?
Sunday, 5. September 2010
I need some help. We have used up a lot of our Home Equity Line of Credit and realize that it will take us forever yo repay it. I wasn’t sure if I should re-finance. We qualified for a FHA loan-6.5% interest rate and have paid in 6 years on a 30 year fixed rate.
Our credit limit on our line of credit is 66,500.00 and we have used up almost 60,000.00!
What is the best way to approach this? Also what are "points"? Do I want "points" when re-financing?
Thanks
Ed Atun Says:
You do not want to refinance. It doesn’t solve any problems. Just pay down your equity loan. Then it will go away and you will have just one loan at a good interest rate. Each refinance costs you $5,000. The money is gone. Use that to pay down your current loan..
The refi costs of $5,000 have many names. One of them is "points". WHich is 1% of the loan. But it doesn’t matter what the fees are called, it only matters how much they total up to..
Ted Says:
Mortgage rates are low, so now would be a good time to get a mortgage and roll your unpaid principal on your first mortgage and the balance on your HELOC into a new fixed rate 30-year conventional mortgage. A "point" is 1% of the value of the loan. Many places will give you a choice of paying some points up front and getting a lower rate (1/4 or 1/2 percent lower per point) or no points and a higher rate. If you’re planning to stay in the home for five years or more, take the points. Most lenders will roll this into the loan for you.