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I am thinking about calling my credit card companies to see if I can get a decent balance transfer offer to pay off my HELOC. I get 0% offers all the time but I just shred them up. I don’t really want any more credit, I am trying to get rid of the debt that I have now.
I was thinking that I could transfer the balance of the HELOC (Currently at 10.25% or Prime + 2.5%) to a lower rate credit card, which will free up a portion of the $220 in interest that I pay per month.
The only downside I see to this is that I lose out on the mortgage interest deduction. I am hoping to have it paid off/refinanced before the end of the year but this transaction might save in excess of $1,000, which is probably a bigger benefit than the tax deduction. So far I have a 1.9% offer but it carries a fee that I can probably get waived.
I also opened a letter from my mortgage company today which said that I was pre-approved for a $20,000 increase in my home equity line. I initiated the increase just because I am currently maxed out on the line and the increase will improve my credit score if anything. There is a negative impact on your credit score the closer you are to the credit limit.
What do you think?
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3 comments:
Why do you want to increase your HELOC? because its maxed out? IS your goal to create or elimiate debt.
Anonymous - Thank you for comment.
I am very committed to getting my financial situation in order. The HELOC is indeed maxed out because of an 80/20 home purchase and NOT due to personal spending. Since the HELOC is maxed out, it is pulling down my credit score so the increase will serve to reverse that effect. I do not plan to use the additional credit line increase for any personal spending and I still intend to pay off the HELOC this year.
It may not be a bad idea with 2 Big conditions. First, read every bit of fine print in the 0% offer. Look for transfer fees, etc. The second condition is that you must be 100% sure you can pay it off within the 0% terms (12 months?). So that’s $25k or right about $2100 per month figuring 12 months. That’s a lot of Jack!? Again you have to be 100% positive you can pay it without any life issues getting in the way. And we all know how that works! :)
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