Asked by Charles Jones  |  Submitted June 26, 2014

I have a HELOC loan of $181,000 coming due. Do I extend the term (10 yrs) or refinance both 1st and 2nd, but higher monthly payment?

The 2nd is $181,000, 2.5% current interest rate, but variable. 1st is $121,000, 3.75%. Current monthly payment is a low $934/mo. Refi now at 4.25% would make payments $1500/mo.

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  Answers  |  4

August 08, 2014

Based on the 2.5% rate of your HELOC, it appears to be PRIME -.75%, which is a pretty sweet deal. I don't know if your initial interest-only term was for 15 years or 10 - it sounds like 10yrs by the way you mention extending the term. I don't know of any lenders doing term extensions on HELOCs but if your will, take them up on it ASAP. Doesn't make sense to refi your 3.75% 1st into a 4.25% new 1st. Try to stay with what you have, extend that HELOC. Good luck.

$commenter.renderDisplayableName() | 05.21.18 @ 03:12


January 31, 2015

Although you have a great deal right now, it is possible you won't be able to extend it, and if you can it might not be at the same rate. Before you refinance the 1st and the HELOC shop for the best options. A mortgage broker might be a good option. See if you can find one that will work for your best interest (a fiduciary).

$commenter.renderDisplayableName() | 05.21.18 @ 03:12


September 01, 2015

HELOC is a short term fix. Interest only loan with low start rate isn't a plan. Combine the two and start paying the principle down. Rates will rise in the coming years

$commenter.renderDisplayableName() | 05.21.18 @ 03:12


January 26, 2016

You said the HELOC's 'due'; clarify before you act on that. HELOC's are most often interest only for ten years and then start to amortize for the remaining 20 instead of being due in full.

Rates are rising but the fed's target is just a 1% increase for 2016; calculate their potential impact vs your ability to pay down the HELOC and ameliorate the interest rate risk.

An amortizing loan has a higher payment because it includes principal. If you're already paying add'l money to principal on the HELOC, you might not change your budget that much in a refi. If your HELOC was used as purchase money, you could combine first and second as a non-cash-out refi and beat 4.25 (WAC, primary SFR, etc).

$commenter.renderDisplayableName() | 05.21.18 @ 03:12


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