Interest Only Equity Line Of Credit

Have about 7K of CC debt at %2.99. Also have 67K in an interest-only equity line of credit @ Prime + %2.25. Which should be the priority in a debt reduction plan?
* %2.99 rate is a balance transfer rate. regular rate for purchases on this card is %9.99.

If your credit card debt is truly 2.99%, congratulations. That's phenominal. Keep an eye on that debt, and read the fine print; Credit Card debt is often 12% to 15%!

Considering prime rate is on the rise, and sitting at about 7%, your Equity Line is probably at 9.25%.

I just got a Home Equity Line for Prime MINUS 0.75% (with a lot of negotiating and a good credit rating). You shoud shop yours. You may be able to immediately slice your interest rate by a couple points. A 2-point reduction in your Equity rate will save you $1400 per year. A 3-point reduction would save you over $2000 per year.

So, to answer your question directly, your Equity line should take priority, simply because it's about 6.5 percentage points higher than your Credit Cards.

But once again, CHECK YOUR TERMS of the credit card! I just am having a hard time believing that you have a 2.99% rate on UNSECURED debt (credit card debt) for any long period of time, while you have a 9%+ rate on SECURED debt (secured by your house).

The plan I suggest:

- Check your terms of the credit card. I bet that it's either a limited time offer, or they are hitting you with "fees" which you should also consider, when calculating the rate.
- Shop your Equity line at other banks or credit unions.
- Pay off the higher interest rate one first.

2005-12-10 08:52:01 by danisaacs

A home equity line of credit (HELOC) can provide a flexible alternative to a traditional fixed or variable mortgage. A HELOC gives you access to ...

I have a 1st mortgage of about $100,000 on a condo valued at approx. $380,000. I have a home equity line of credit ( $20,000) that is interest only with no pre pay penalties. Can I refinance for a 15 or 20 year fixed?

Yes, but i'd go 30 years with a fixed rate and open end which means you can pay down the morthage anytime. Also request an amortization so you'll have a break down between the principle/ interest.

2008-01-30 22:18:41 by Ray F

The interest rate on an equity line of credit was 7 5/8 % last month. This month the interest rate is 9 3/8 %. How many percentage points has the interest rate increased?

1 3/4

2008-12-02 14:49:49 by Jayk

A couple of years ago I tapped into the equity of my home to the tune of 30,000. Rates remain ok, as they are a couple of points above prime, but i feel as if I am sitting on a time bomb. I am not in the best position to refinanace the house because of the decreased value. How can I transfer that debt to something with a locked interest rate while i pay it down?

Have you ever thought of a personal loan? that would be locked in and you could just pay off the 30k. Its just might be an idea so don't jump into it. I would suggest to find a mortgage licensed person to help you out. And if I were you don't ask the bank cause most of the time there not there to help you!

2009-06-11 08:08:57 by huck75

I currently live in a house in California that has my grandfather, my father, and me on the deed. We are each 1/3 owners of the property. It is completely paid off -- there is no mortgage. I was wondering if there would be any way I would be able to get a HELOC on the house WITHOUT the signatures or permission from my father or grandfather. They are both skeptical people and swear that banks are out to screw people over. They also do not know anything about real estate and they swear real estate is nothing but risky investments. I cannot get them to just deed the house over to me because they have no education on real estate and they swear they have to be involved for some reason. My father and grandfather don't make any of my decisions and haven't since I've been an adult for the last 10 years. This would help greatly if someone could offer some advice! This house has so much equity and it's time I start expanding my real estate portfolio! Thank you so much.

All vested owners have to sign an acknowledgement giving you permission to take out a lien on the property. They would not have to be on the hook as borrowers, but they do have to grant the permission for the lien.
I am a lender at a large bank and can understand their reluctance. In the wrong hands, a heloc can lose the home. In the right hands it can be a good investment tool or emergency source of cash. They must think yours are the wrong hands?

2006-05-31 18:15:39 by anynewideas