HELOC - keep it open or close it

Our HELOC is going to be paid off soon (It was used as partial downpayment on the house.) It's some obnoxious rate of 7.x percent.

We arent going to be doing any renovations, have no CC debt and no other large expenses coming up (car, etc)

I can't think of any reason to keep it open, considering we have a healthy savings fund. If we were to get new cars, etc we would get a better rate than 7.x% so I can't really think of a reason to keep it open.

Thoughts?

Re: HELOC - keep it open or close it

I always keep a HELOC open. It's basically your way of showing the bank you actually have equity in the house.

You said you want to close it... why would you want to? It doesn't cost you anything to have it open right?

Leave it open. And your rate is probably way less than that. A 7+ percent interest rate would be equivelent to prime plus like 3 or 4%. Thats super abnoxious and your effective rate is probably lower than that currently.

Re: HELOC - keep it open or close it

Our HELOC is fixed, not adjustable. All of the paperwork says 7.3%. We got it years ago when that was a standard rate.

I don't see the reason to keep it open if it is a huge rate. If it was a decent rate, OK then keep it open as a just in case.

If we need a loan in the future, then I'll get another one, probably at a much better rate.

Re: HELOC - keep it open or close it

I'd call them to renegotiate the rate or tell them you will close it. Is this the same bank that has your primary mortgage?