mortgage and heloc

[rudy]

Currently I have mortgage less than 40,000 and heloc with zero balance of 40,000. I was wondering if it would be a smart move to use the heloc to pif the mortgage.

Reasoning: This way I will always have access to capital without refinancing.(son going to college in fall). Please list good and bad points on this issue. This is just a thought

[ShanetheMortgageMan]

What is the rate on the mortgage & what is the rate on the HELOC?

If you pay off your less than $40k mortgage with the HELOC that has a zero balance with a credit limit of $40k... how would you have access to more capital than if you just left your HELOC alone?  If you paid the mortgage off, you would have less on the HELOC to use...

[rudy]

Mortgage at 6 percent

Heloc 7.5 percent, just went down

Thought.  Since Heloc is revolving. I can always pay it down for sons tution bill. Without having to pay a mortgage as well. If I used heloc to pay mortgage off. 0 balance on mortgage and 40,000 on heloc

One note (possible double payments to heloc. Currently, house payment of 800.00 and heloc payment ?.) Which would turn into Mortgage payment of nothing and heloc payment of 800.00 plus dollars)

Currently, I would borrow from heloc (for tution). Pay mortgage 800.00 plus heloc ?

Two Notes (this would make it harder to cut heloc balance down quickly)

I might be thinking to hard on the subject. I am asking for other inputs. This is not written in stone Open to others opinion

Food for Thought  (what do you think?)

Message Edited by rudy on 01-05-2008 03:44 AM

[ShanetheMortgageMan]

Well I wouldn't ever suggest transferring debt from a lower interest rate (6%) to a higher interest rate (7.5%), that just doesn't make much sense.  How about you apply extra payments towards your mortgage to pay that down quicker, then use the HELOC for your son's college tuition or other expenses?  You might even be able to increase the limit on the HELOC as you pay your mortgage balance down... for example paying off $20k on the mortgage over a period of time, then asking the HELOC to increase it's limit.

[rudy]

Thanks that is a option as well. I never thought of that