Home eq Loan vs. mortgage
Question: Also traditionally true, and again these are not traditional times and on this specific point, the times have not been traditional for a number of years.
Answer: True.
The prime rate is being artificially held low. HELOCs are based on the prime rate.
Mortgage loan rates are tied to mortgage bond rates, and due to various reasons, but mainly due to the poor economy and the huge deficits, these rates are going up. The historic low rates in mid-June were an anomaly.
I would hesitate to substitute a 3.5% HELOC for a 4.25% mortgage if I needed ten years to “pay off” the HELOC. For five years it’s a judgement call, but I personally wouldn’t bother.
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Filed under: Home Equity Loan
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