Pay down HELOC during Promo Rate Period?

Question

Hi there,

I have a HELOC with a balance of $82k that is under a 0.99% promo rate until the end of August. In September, the HELOC goes to the prime rate.

What I'm trying to decide is if I should prioritize paying this down before the promo rate ends next week or not. I have the $ to do so, but I also would like to stay pretty liquid over in case a deal comes up. Which I guess I could just use the HELOC again for.

Anyways, any thoughts on this would be greatly appreciated.

Thank you!

Ned Carey · Answer

@Ryan Elam the answer will change from person to person. The more you borrow the more risk you are taking. How much risk are you comfortable with?

Generally risk aside, you look at how much does the money cost you vs how return you can get if you invest it.  My guess is prime rate is still dirt cheap historically as far as the cost of money goes.

Ryan Elam · Answer

Thanks for response, @Robert Muzyka! I got the HELOC at PenFed.

I also have a mortgage on the property. The house should continue to cash flow even with the mortgage and HELOC payments.

Robert Muzyka · Answer

I guess it would depend on whether or not your still cashflowing even after the rate jumps up to the prime rate.  Is that the only debt you have on the property?

Also, where did you get your HELOC?  That's an awesome introductory rate.