friends have suggested I apply for HELOC for $120k, not use it, pay annual fee, for emergencies
Hello; some friends have suggested I apply for HELOC for $120k (I owe $115k yet, have 9 yrs left on a 15yr fixed mortgage, 2.37% int.; condo worth $325K); do not use it, pay the annual fee, keep open for emergencies or remodeling. I have currently 3 months emergency funds in cash accts and add monthly. I never heard of this strategy and am very skeptical. Please advise, would this be wise or not. Thank you!
Terry Says
Yeah, I don’t like that strategy. If it’s that kind of emergency — a HUGE one — you’ll be able to get a HELOC since you only have a 30% debt to equity ratio in your house. Why pay the fees??
Some suggest a HELOC would prevent title theft (an uncommon thing anyway) but since you have an outstanding mortgage, that can’t happen. And hang on to that GREAT, LOW-RATE mortgage!
