Posted on: 30th Dec, 2005 01:30 am
Can you please give me some advice regarding my $26,000 line of credit based on the equity I have in my home? I am concerned about the rates going up, so I looked into a lock in option provided by my lender. Under this option I can lock in and out 5 times. I took out my equity line last march at a rate of 5.45%. But now its up to 7.15%. And since I was concerned I opted for a lock in a fixed rate on my $14,600 remaining balance at 9.03% for approximately 29 years. My current mortgage payment per month is $100. The locked in rate payment is due to start in February and the monthly payment will then jump to $115. Do you think it was a wise decision?
Hi,
The 9% interest rate seems to be very high to me. And the rates are creeping up but I personally haven’t heard anybody predicting that the long term interest rates will exceed 7% leave apart 9%.
But there are several ways to look at it. Paying $15 more per month is not a lot of money especially when your payment may not go higher. Still $15 for 348 months adds up to 5220 that is more than one third of your remaining balance. But at the same time you can also back out from your rate locks if the rates go down. You can always take advantage of a lower available rate.
Thanks,
Jerry
The 9% interest rate seems to be very high to me. And the rates are creeping up but I personally haven’t heard anybody predicting that the long term interest rates will exceed 7% leave apart 9%.
But there are several ways to look at it. Paying $15 more per month is not a lot of money especially when your payment may not go higher. Still $15 for 348 months adds up to 5220 that is more than one third of your remaining balance. But at the same time you can also back out from your rate locks if the rates go down. You can always take advantage of a lower available rate.
Thanks,
Jerry
Hi Simon,
I just want to add something more to what Jerry says. Your decision should be based on how much you can afford. You should work out the worst possible scenario and then start off.
You can also talk to a financial advisor or the one who handles your tax related issues for further counseling.
Thanks,
Jill
I just want to add something more to what Jerry says. Your decision should be based on how much you can afford. You should work out the worst possible scenario and then start off.
You can also talk to a financial advisor or the one who handles your tax related issues for further counseling.
Thanks,
Jill