Is it smart to keep my home equity line as my primary mortgage or refinance to a 30 yr fixed?
March 28, 2010 by
Filed under home equity
The interest rate is 3.49% on the home equity line. Will this be going up soon? I just worry that it might go really high sometime.
The rate is tied to the wall street prime rate. Prime – 1/4%
Depends on what it’s tied to. If the rate is tied to the prime rate, then it’s probably going to be okay for awhile. Even if it adjusts upward, the Fed rarely adjusts prime more than .25 % at a time.
Find out what the rate is tied to.
To me, it depends on how long you plan on remaining in the property. You would want to check your documents, but most home equities are for 20 years with them being split 10/10, you can draw on the line for the first 10 years, and then have the last 10 to pay the loan back. Also, the rate is tied to an index, so there is a possibility that the rate could fluctuate during the 10 year repayment period. Find your agreement or call your lender to find out the specific details so you can make a solid decision