a couple of HELOC questions I need Help with please..........

3 Replies

Hi ,

I have two HELOC related questions that I need some help with please

1. I have a 5 year Interest Only HELOC right now

Is there a way to to " Re-start " it back to the 5 year mark?  Like if I were to pay it all off in Full ? 

2. Is having a HELOC as good as having the actual cash on hand ?

EXAMPLE:

Say I want to have on Average , $30,000 for any time that I go to buy an Investment Property 

Is having a $20,000 HELOC at your disposal , as good as having that $20,000 in cash ( in a Savings account ) ?

Thank you so much for the help 

@Michael Dunn

1) You can ask your lender if they will extend the draw period (some do), but otherwise, no, you will have to apply for another HELOC at the end of 5 years.

2) nothing is as good as cash in hand, but yes, a HELOC is the next best thing.

While you may get lucky with a lender willing to extend the draw period, that's unlikely. Depending on how long you've had the line and your current rate, it may be worth shopping around for better terms. 10 year draws are common and draw period shouldn't affect rates. Sometimes lenders are just lazy and tick the box for 5 year draw. I had this happen at closing once and when I called it out, they sort of shrugged and said, don't worry about, we can just do a new line in 5 years. That didn't fly with me so they just fixed it and made it a 10 year, which is better for obvious reasons.

Also, I agree that HELOC is almost as good as cash on hand, except for (at the risk of stating the obvious) you're going to pay interest will you pull money out of the HELOC. That said, I'm of the opinion that it usually makes sense to pay down a HELOC rather than have money sitting in a low interest savings account.

Thank you both so much for your help 

i really appreciate it 

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