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| *Loan,banking and credit>>>credit line |
I have a rather large home equity line of credit debt.? |
We used 98 thousand out of 120 thousand line of credit to do major home improvements. We are very happy with the improvemnts but now have about 700 dollars per month in interest only payments. My husband wants us to also have a savings account filled up with funds in case of emergency. I think we should dump any extra money into the home equity debt which will SLOWLY lower our debt and payment amount. Then, if we ever have an emergency we could draw from the home equity loan. What do you think we should do? I agree that it makes little sense to be paying 8% on your line of credit, while earning 2% in your savings account. That being said, as long as you are certain the line of credit can't get closed on you for some reason, you should pay down the line of credit. You will save money in interest, and hopefully be able to start paying down your line of credit. Interest rates have dropped lately, it might even make sense to refinance and roll that line of credit into a new first mortgage. I'd assume that even if your rate is Prime + 0%, you're still at 8.25%. First mortgage rates are about 2.5% less than that right now. Source(s): 10 years in mortgage banking Apply payments to the Line of Credit that are comfortable while still saving a portion of your money monthly. For example, if you are comfortable sending in 1000 per month total then send in 900 and drop a 100 in savings... ING has a savings account yielding 4.5% with no minimum balance or fee requirements. Sure, you are not going to be a millionaire with interest like that but at least it is something. |
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