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.
Answers | 4
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).