HELOC refinance question

Guest 0.10 Dollars($)

Hi Mentors, I am hoping for some guidance.

I have found that I am getting lost in the credit card "shell" game, moving around balances to keep them at teaser rates trying to avoid transfer fees when possible. My balances never seem to go away though. Coupled with that are rising rates affecting my adjustable rate HELOC. I refinanced about a year and a half ago and did an 80/20 Fixed and HELOC. My questions are:

1} Should I refinance my HELOC into a fixed rate 2nd mortgage to stop rates from rising?

2} Can I get that 2nd mortgage to include my credit card debt and car loan? (note I will be within 125% of my home's value)

3} If I am able to do #2 will all of my interest be tax deductible?

Please advise....Sincerely,

The Shell Game Guy Smile

jameshogg · Posted: Wed May 24, 2006 3:28 pm Post subject:

Samantha · Last edited by Samantha on Wed May 24, 2006 4:19 pm

Hi,

Welcome to MortgageFit Forums.

You need to analyze and decide on which way to go when you think of refinancing your HELOC.

blue · Posted: Wed May 24, 2006 4:15 pm Post subject:

Second mortgage loans are most suitable for consolidating debts.

Guest 0.10 Dollars($)

thank you both for the feedback...

Samantha,
I was hoping the interest on a 125% loan was fully deductible but this site says the IRS treats the amount over the home's value differently depending on what the extra is used for {see link below}:

realestateabc.com/taxes/deductible2.htm

Is this true? If so, how do they verify what you spent the extra cash on? Not that I'd do this, but could I say it was for Home improvements and then use it for debt payoff?

Please advise...

Samantha · Posted: Wed May 24, 2006 5:02 pm Post subject:

Hi,

Welcome again.

Yes it is true that the portion of the money, from the 125% loan-to value second mortgages, that exceeds the value of your home is not tax deductible.

Direct deduction of the expenses associated with home improvements from your taxes is not possible but your home's value will increase with these improvements.

You need to keep all the receipts from the home improvements so that you can prove what your home is worth and thus the potential taxable gain will reduce during the sale of your home.

Feel free to ask if you have more doubts.

Thanks,
Samantha

blue · Posted: Wed May 24, 2006 5:12 pm Post subject:

Tax deduction related matters are complicated and changes with time. This site can be helpful for you to know more on tax related to your query.

It is nice to see your interest and concept in the mortgage field. Why don't you join the MortgageFit Community? You can sign up here to become a community member and participate in the forums.

Guest 0.10 Dollars($)

Word of advice. You will pay much less interest with a HELOC vs and 2nd mortgage. The HELOC is calculated on a average daily balance, So by putting a little extra payment towards your HELOC your ammount owned will decrease every month. 2nd Mortgage payment will stay fixed for the life of the loan. Don't worry so much about the interest rate, but by how it is calculated. You will pay less interest in the long run. Don't listen to all the scare tactics. Use logic when making decisons NOT emotions. Regards, Swanson Real Estate Investments

Guest 0.10 Dollars($)

We have a HELOC loan (no mortgage loan). Can we convert this into a another kind of loan, a mortgage perhaps, in order to get more than 50% of our home's value (we live in TX)? We plan on continuing to live in this house for a long time. Thank you!

savior70 · Posted: Tue Jun 02, 2009 4:45 am Post subject:

Hi

There are some convertible home equity line of credit loans which can be converted into a fixed rate loans after a certain period of time. But there are certain conditions to do that, which varies from lender to lender. You can go for a cash-out refinance if there is enough equity in the property. You can refinance to a fixed rate loan and use the cash-out money to repay the HELOC. You can also convert your HELOC into a fixed rate home equity loan. Check with you HELOC lender to find if these options apply in your case.

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