Well it’s time for me to refinance my heloc. Actually refinancing isn’t the correct term when it comes to a home equity line of credit. It should more correctly be described as getting a new heloc with a higher credit limit. Anyway, now that I’ve noted the correction I’ll revert to the incorrect term because everyone uses and I see no point in adding to the confusion unnecessarily. Enough said on that topic.
Where was I? Oh yea, refinancing my heloc.
I know it seems ridiculous to want to get an adjustable rate loan when the rate on fixed loans are so low even the snakes are having a hard time getting that low. But I have this fixation in the belief that it is always best to borrow money when you don’t have a need for the money.
As I look around today. I see a very uncertain financial landscape and my poor little $25,000 heloc just isn’t making me feel that secure. I’m just not feeling the love that comes with knowing that if a situation arises that requires some cash my little heloc isn’t going to be big enough to cover it. Then what?......... I do know is this!
I’ve got a 16 year old that’s starting to think about what collage he wants to go to in two years. Therefore, I’m looking at what the cost of higher education is today (now I fully understand why they call it higher education). Anyway, paying for education is a great reason to have access to cash. Knock on wood; I should be able to cover my son’s expenses …. But you never know what may come up.
Other great reasons to refinance my heloc
2. Cover unexpected medical expenses. Have you seen what it costs to be sick? It’s outrageous. It’s also the number one reason people declare bankruptcy. I’m in good health but….! Getting Older, so I guess I now have another reason to increase my heloc limit. 25K isn’t looking like a lot of cash now.
3. Make home improvements. Looks like I’m safe here. The old homestead is in good shape. BUT….. ! With junior going off to college soon, the wife may decide she needs a new focus in her life. Come to think of it. She does keep mentioning how nice a swimming pool would be.
4. Pay off credit cards/debt consolidation. Well I know I’m safe, safe, safe here. No card debt. Thank God.
So I’m OK with one out of four. That doesn’t instill a lot of comfort. That 25k home equity line of credit is looking pretty tiny right about now. Yep… it’s time to refinance that heloc !
You never know what tomorrow will bring. Today I know I can qualify for my refi.
When I was active in the mortgage business, borrowers that were close to closing on a refinance often asked if I thought they could hold off making their monthly payment on the so and so credit card, car note etc. because it was going to be paid off with the refi money. My reply was always the same; don’t miss a payment if you can help it. You never know what can happen between now and then. Most of the other loan professionals thought I was being overly cautious but I always have in the back of my mind... you never know.
I never expected to live to see the financial world come grinding to a halt on September 11, 2001. But it did! Then I had the opportunity to witness first hand all manner of people’s lives come to a grinding halt on an August day in 1995 when a storm by the name of Katrina ravished the gulf coast. My rather dramatic point is you..... "just never know where your life is going to be when you have a need for money". And if you think you were going to qualify or fund a loan during any of the examples I have given you. Think again. It wasn’t going to happen. With 9/11 things got back up after a couple months. With Katrina there are people still struggling and then September 2008 comes and whole segments of the mortgage industry are, poof….gone. I don’t have a crystal ball and don’t know anyone that does.
This is the number one reason to refinance my heloc.
It offers protection in the future, against an unforeseen event. Protection that I qualify for and get now when my credit is good and I don’t have a need for the money.
For this reason the major disadvantages for refinancing my heloc …
1. Additional closing costs. This is a minor consideration that can largely be negotiated away with my lender
And
2. It’s an adjustable rate loan. This really doesn’t enter the equation until I have a need for the money. As longs as the money is not drawn on there is no interest accrued.
… doesn’t seem to be a major concern for me now. Yep, I think its time to refinance my home equity line of credit (HELOC).
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