HELOC Mortgage

When is this a good thing to take out?

We made some major improvements
on our home. Used as much money that we had and put some on credit. We are completely done and may consider this.

Is this a good idea?
Are the rates pretty decent?

TIA!

Re: HELOC Mortgage

Do you plan to use the money to pay off the credit debt from the improvements or for something else? If you plan to use it to pay off the debt and you get as good or a better (or even slightly higher) interest rate, it may be a good idea -- as I believe the interest on a HELOC is tax deductible, whereas the interest on your CCs or other loans is not.

I wouldn't take out a HELOC for anything other than to pay for major home improvements or for refinancing certain debt (e.g., I make too much money to deduct my student loan interest. At some point, we will take out a HELOC to pay those off and be able to deduct the interest from our taxes -- but only if the interest rate is as good or better). This is JMHO.

Re: HELOC Mortgage

We have a heloc on a second home DH owned before we were married in South Carolina. DH got this loan last year and the interest rate is prime + 2.

We looked into getting one on our primary residence, thinking we could get a better rate (DH also had some fraudulent items cleared off his credit card that increased his credit score). He spoke to our mortgage broker last week and he said although interest rates have gone down, rates for these types of products are high right now because of the subprime fallout (so basically the rates are higher than prime +2).

We used ours for part of the downpayment on our home (instead of taking out a second mortgage because the rate was better). It's also nice to have in case of emergencies. Like Kara posted, the interest on it is tax deductible.

Message edited 10/10/2007 11:31:13 AM.