Keep the Loan or Add to the Equity Line?
Friday, 3. September 2010
I own a house which I bought 4 years ago. I have an equity line at a 4% interest (IT IS NOT interest only). I also have a land loan for 28000 which is INTEREST ONLY at 6.5% interest and it is fixed until 2010; then the interest will change. I have been thinking on putting the 28000 in my equity line to pay off the loan. I will have a better interest rate and I will be paying some money to the principal. Now, I’m concerned because maybe it is a bad idea to add balance to your home equity. What do you think. Should I keep the loan separate from the equity line or should I add the loan balance to the equity line? Thanks a lot.
Reena Says:
You bought at the height of the bubble and you are one of the ARM’s that have yet to reset starting around 2010… you and about 300 billion dollars worth of others…
You wouldn’t add to your equity but deduct from the established equity.
In other words your equity would shrink by 28,000 if you pay the "land loan" (piggy back?) with your available line of credit.
Interest wise it looks to be the better deal. I am just curious whether your lender would go for this. Heck, what do you have to lose?
If you can talk your lender into moving this amount from one end of your obligations to the other end… in the end you still owe it.
Good Luck.
Sierra Says:
Have you ever heard of a bi-weekly loan plan? You can pay half of your mortgage note every two weeks. At the end of the year you would have paid 26 half payments, which is 13 whole payments. The last payment will go to principal and help you pay off the loan faster and save thousands. I sell bi-weekly loan plans on ebay… seller: imthegrl. You can learn more about it at EquityCorp.com or on Ebay.