Home Equity Line of Credit, keep or close?

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bumblebh
Posts: 15
Joined: Tue Sep 05, 2017 6:42 pm

Home Equity Line of Credit, keep or close?

Post by bumblebh » Sat Sep 22, 2018 12:01 pm

I opened a line of credit with my bank when I added a sun room onto my home about 3 years ago. Amount is about $59,000, I did not use the full amount I had the loan for and paid it off with a year or so. To keep the account there is a $65 annual fee. I have paid it for the past 2 years as I anticipate some other large amount home improvement projects (kitchen remodel) in the future, but not sure how soon in the future. I of course dislike paying an annual fee, but thought it might be worth paying just to keep this account open for now. What I like about this account is it is I can use it like a credit card, and pay for near everything at home improvement stores or where ever. The rate right now is 5.99% if I were to utilize it. A kitchen remodel will not cost nearly as much as the sun room (I hope) did so I could probably pay out of my savings, which is not earning anywhere near the 5.99% rate. So typing this out makes me think I should close it. Any thoughts out there on this?

petrisunset
Posts: 23
Joined: Sat Feb 28, 2015 4:02 pm

Re: Home Equity Line of Credit, keep or close?

Post by petrisunset » Sat Sep 22, 2018 12:12 pm

I have a HELOC since 5 years. Never used it so far.
I’ll keep it should I ever need a larger amount on the spot.
HELOC has zero fees (beside the interest once used)

bradpevans
Posts: 331
Joined: Sun Apr 08, 2018 1:09 pm

Re: Home Equity Line of Credit, keep or close?

Post by bradpevans » Sat Sep 22, 2018 12:19 pm

You might offer them less and see if they bite

FWIW, my credit union HELOC has no fees

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whodidntante
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Joined: Thu Jan 21, 2016 11:11 pm

Re: Home Equity Line of Credit, keep or close?

Post by whodidntante » Sat Sep 22, 2018 12:28 pm

It doesn't sound like your terms are fantastic. I have a HELOC also, but I do not pay a fee and my rate is WSJ prime adjusted annually. It's at a local credit union. I would ask them to waive the fee.

I would also point out that margin is a pretty good option if you have a lot of taxable investments with significant capital gains. The rates available at IB are lower than your HELOC rate right now. There are no fees, and there is no payment required (the interest just compounds if you don't pay your margin balance). You'll obviously want to stay above maintenance margin if you do that. It also includes a debit card.

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Kenkat
Posts: 4304
Joined: Thu Mar 01, 2007 11:18 am
Location: Cincinnati, OH

Re: Home Equity Line of Credit, keep or close?

Post by Kenkat » Sat Sep 22, 2018 12:36 pm

You should look and see if you can getter a better deal on a HELOC. Mine is no fee and current rate is 4.24%.

bumblebh
Posts: 15
Joined: Tue Sep 05, 2017 6:42 pm

Re: Home Equity Line of Credit, keep or close?

Post by bumblebh » Sat Sep 22, 2018 2:39 pm

thanks for the advice, I think I will check with the bank regarding the annual fee and whether it can be waived.

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