home equity line of credit


M

mooslie

I have an RV loan of $39,500 at 6.99% fixed with approx. 13 years left. Is
it a good Idea to get a home equity line of credit at 4% variable with no
setup fees at bank of america.

Thank you

Mike
 
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J

John A. Weeks III

mooslie said:
I have an RV loan of $39,500 at 6.99% fixed with approx. 13 years left. Is
it a good Idea to get a home equity line of credit at 4% variable with no
setup fees at bank of america.
I would be against turning a mid-term debt into a long term debt.
I would also be against putting your house at risk when you don't
have to. I would also be against turning a relatively good fixed
rate into a variable rate. The H/E loan would (in many cases) allow
you an extra tax deduction, but then again, many states treat RV's
as 2nd homes, so you can get the tax deduction anyway.

The decision all comes down to a gamble that rates on the H/E loan
will stay under 7%, or if they go over 7%, you will save enough
before that to cover the extra interest later on. Given that
interest is at a historic low right now, and Mr. Greenspan has
promised to raise interest rates, and high oil prices are going
to give us a burst of inflation, I fully expect that H/E rate
to go up. I'd keep the fixed rate as insurance against the Fed
or the government doing something stupid.

-john-
 

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