Got a unique situation - home is valued at 600K, owe 100K on a 1st @ 6% and 200K on a HELOC currently at 3%. I realized at 0 cost I can increase the HELOC to 300K and pay off the 100K 1st, hence move the 100K from 6% to 3%. BUT, the 6% is fixed 15 year amort, whereas the HELOC is prime+3%. No question I can save some $ in the near term, but how safe is it to have the whole 300K at a variable rate?
My reasoning leaning towards this is the prime rate, IMO, is never going to skyrocket in a 3-6 month timeframe. If/when I see that rate begin to rise (.25% per quarter, worst case), I refi the whole 300K on a fixed mortgage. I may miss out on the rock bottom fixed rates of today, but as long as I catch it on the upswing, I'll still be able to get 3-4% on the refi.
One additional consideration, I am expecting a large payout within the next 6 months and plan to reduce the full 300K owed to just 100K, at which time I could refi the remaining 100K to a new fixed rate. I don't want to refi today because I know this payout is due and don't want to pay the refi fees on the 300K amount. Also, I want to refi just that remaining 100K so my future P&I are substantially reduced.
In case you're wondering, the 200K HELOC was funding to build the 600K residence, so I do know how to manage my spending. And as it is, I've been paying only 3% on that HELOC for the past 4 years, thus doing as well or better than most fixed rates.
Looking for any creative input or recommendations.
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germanpope
Graceful Member
posted: Jan. 16, 2013 @ 11:26p
more interesting is the over-under on the 49ers - Atlanta game
it currently sits at 49
sharpie130
Senior Member - 1K
posted: Jan. 16, 2013 @ 11:42p
i gotta say under. 48-0 49ers. and no i'm not a 49ers fan
FastEddieG
Senior Member
posted: Jan. 17, 2013 @ 3:59a
NE vs SF super bowl?
imbatman
Nerdy Member
posted: Jan. 17, 2013 @ 6:31a
Falcons FTW
ellory
Be vewy vewy quiet
posted: Jan. 17, 2013 @ 7:33a
allpinball said: Got a unique situation Not unique. Search the forum
dcwilbur
Ancient Member
posted: Jan. 17, 2013 @ 9:32a
allpinball said: 200K on a HELOC currently at 3%...the HELOC is prime+3%.So which is it, 3% or prime+3%? Makes a big difference.
JaxFL
Senior Member - 5K
posted: Jan. 17, 2013 @ 2:07p
Crazy
lotusgardener
Broke Member
posted: Jan. 17, 2013 @ 6:05p
Why not just do a no cost refi now since you have 50% equity. Problem solved. And if you really want, open up another HELOC. /problem.
kgclark
Member
posted: Jan. 17, 2013 @ 8:50p
Why not just do a Penfed 5/5 refi. With the $10k closing cost credit, fees will be minimal.
Chiron
New Member
posted: Jan. 17, 2013 @ 9:29p
Refi all of it right now at the cheap rate. If you pick the right lender, closing costs aren't that variable based on the amount of the loan.
And, depending on your portfolio of assets, don't make the 200k payment in a few months. If you refi it all right now for 30 years at 3.25-3.5% (with the mortgage interest deduction making your effective cost even lower), you'll have that rate locked, plenty of equity in your house, and money to take some more +EV risks with.
kensat30
Senior Member
posted: Jan. 18, 2013 @ 1:23p
You got a problem here, prime + 3% is not 3%.
allpinball
New Member
posted: Jan. 19, 2013 @ 8:51p
sorry bout that - I know the rate is currently 3% - and know it is computed as some rate + 3%; that some rate must be 0 right now (maybe the federal funds rate?).
allpinball
New Member
posted: Jan. 19, 2013 @ 8:54p
thanks for the penfed 5/5 idea - refi of the $300K with low to 0 fee would get me the same result asI was thinking, and would lock me into the 2.75 rate for at least 5 years - unlike my idea of HELOC the full 300K. And still leaves plenty of time to get out of the ARM if the rates begin to rise.
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