Author Topic: HELOC or no?  (Read 2316 times)

mendyt

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HELOC or no?
« on: May 02, 2016, 12:06:33 PM »
Hello!  I am new to the blog and new to the forum.  My question is....If is still have about $5500 in consumer debt and half of that is high interest, should I get a HELOC to pay it off and get a lower interest rate.  I don't know much about HELOC's they sound scary, so any advice would be much appreciated!

Fishindude

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Re: HELOC or no?
« Reply #1 on: May 02, 2016, 12:17:30 PM »
Talk to your bank and see what they say?
For that small of an amount, I'm doubtful you would be much ahead if you've not already got the HELOC already set up.   Bank will probably charge you something to set up the HELOC, and rate may be a bit higher than your mortgage rate.   $5,500 is not an insurmountable amount of debt.  Couldn't you just reduce spending to bare bones and aggressively pay this down?

mendyt

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Re: HELOC or no?
« Reply #2 on: May 02, 2016, 12:39:41 PM »
Thanks for the insight.  I thought it might be too small to worry with.  I am a single mom, 2 kids, low educator salary, but am trying very hard to pay it all down aggressively as you say.  I just have a smaller shovel!  Am doing some tweeking on the budget though, and hope to do some side hustles in the summer. 

slugline

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Re: HELOC or no?
« Reply #3 on: May 02, 2016, 12:42:59 PM »
How is your credit score? How high is the interest rate on your current debt? If it's on a credit card, probably the smartest move would be to transfer this to a new credit card with a good low rate on transferred balances, and then aggressively pay that down before any teaser rate expires.

In your current situation, how long will it take you to pay this off?

Retire-Canada

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Re: HELOC or no?
« Reply #4 on: May 02, 2016, 01:25:14 PM »
Hello!  I am new to the blog and new to the forum.  My question is....If is still have about $5500 in consumer debt and half of that is high interest, should I get a HELOC to pay it off and get a lower interest rate.  I don't know much about HELOC's they sound scary, so any advice would be much appreciated!

You can also get a LOC that has no tie to your home equity. The rate likely won't be as good as the HELOC, but it would be simpler to get. My bank didn't charge me to get a LOC and there are no fees if I don't use it.

Personally I think having some sort of HELOC/LOC is a smart idea in any case. The cost of borrowing is zero if you don't need it and if you suddenly have a cash flow crunch you can use the LOC and figure out what to do next.

I'd much rather go that way than panic to get a LOC just when I need it or sit on a big pile of cash that's losing value to inflation in case something happens.