HELOC to pay off mortgage

[PJJ]

Hi,
We are at 6% for our mortgage that has 116payments and a balance of 106K. House in this bad market is worth/would sell for 330K.
Cannot seem to find a 10 year mortgage anywhere.
We have no debt but the mortgage and 9 months of savings.
If I do a 15 year mortgage, there will be almost two years to recoup the cost, even with ING--there is always some fee.
HELOC is at 4.7% for 36 months.
With my current plan of paying 1000 extra each month, I will pay off in 5 years instead of ~9.75 years.
With the HELOC of 36K(pay the extra 1000 per month to it instead, what do you think sage mamas?

Any suggestions/ideas?

[cristeen]

I think most HELOCs adjust monthly, which would make it a risky idea.

And what happens if plans change, and all of a sudden you can't make that extra payment each month, and you're stuck with an adjustable interest rate?

My local credit union offers 10-year mortgage, if you wanted to go that way, I'd check with them rather than the big banks. But I wouldn't transfer money from the first onto the HELOC.

And ultimately, the difference in interest between 4.7 and 6 is not that much per month on 106. Over 30 years it is, but if you're paying extra anyway, it's not that big of a difference.

[rhiandmoi]

I haven't run your numbers through a mort calc but I think if you just add the $1000 a month to your mort you should payoff in approx 5.5 years without the heloc. I think with the heloc you might be closer to 5 years but Im not sure. It is the middle of the night here so my math skills are not so great.

[honeybunmom]

I have a HELOC and it was interest only for the first 5 years. I just KNEW I would not have it for more than 5 years. Well, guess what, it's 6 years later and I'm still in it with payments that just more than doubled. If you're already able to pay an extra $1000, that downside scenario may not be an issue for you.

I agree with rhiandmoi - run the numbers and see how much the money "costs" under each scenario and whether you're actually paying less in interest under the HELOC scenario or if it just gets you to the same place paying $1000 extra on the mortgage each month.

[Delicateflower]

Only having three years to get it paid makes me nervous. What if you get sick and can't work so much? Or something else happens. I would feel much more comfortable with a 15 year mortgage paid off in three years, even if it costs more.

[cristeen]

Guys, this thread is almost a year old - someone bumped it from limbo.

That being said, I'd also point out that mortgage interest is deductible, but IIRC HELOC interest is not.

[honeybunmom]

Originally Posted by cristeen

Guys, this thread is almost a year old - someone bumped it from limbo.

That being said, I'd also point out that mortgage interest is deductible, but IIRC HELOC interest is not.

Not sure what IIRC stands for, but our HELOC interest has been fully deductible the entire time we've had it. When we did our taxes ourselves on TurboTax and per our accountant.