HELOC is killing me

[Sean Starkey]

Someone out there please give me some advice about the HELOC I took on my primary to buy my STR. It's at a variable rate and just keeps rising. We owe 178k and the interest only payment is $1455 this month. We have only paid off 2k because the interest is so high. Anyone have any tips I don't know about about how to restructure this or pay it off with private money or anything! Please help!

Thanks!

[Scott E.]

You have a few options:

1. Refinance your primary and take out a new loan that pays off your 1st mortgage and your HELOC, lumping them into a a new 30 year fixed 1st mortgage. My math says your HELOC rate is at 9.8%? If so, this refinance might actually end up saving you a bit of money. And it would protect you from any further rate increases.

2. Sell the STR and pay off the HELOC. This only makes sense if you can at least get what you put into it back out.

3. Sell your primary, pay off the 1st mortgage and the HELOC, and rent for a bit. Allow the market to normalize and pick a direction. Then buy yourself a new primary once you have regrouped.

4. Find a rich friend, acquaintance, or family member who is willing to lend you $178,000 at a rate less than 9.8%.

5. Chill out. Maximize your STR profits in every way possible. Keep making the HELOC payment. Remember that rates are not going to keep climbing forever. Ride it out for a year or two, and things will probably start to come back down.