Ask Terry Questions High interest Home line of credit

High interest Home line of credit

By Terry Savage on August 06, 2023 | Housing / Real Estate

Two years ago, I took out $100,000 line of credit from a Bank at variable rate tied Fed rate. It was as low as 2% in begining. Now I’ve been paying 8% annual rate every month. Should I sell my stock investments to pay off the loan ?

Terry Says

This is the pitfall of the home equity loan. You didn’t just take down a “line of credit” for emergencies; you USED that line and took the money out!
Make sure you are not making an interest-only payment, and make sure there is no balloon payment of the entire amount required in a few years.

So, what did you do with the money? If you put it into the stock market, I think it’s time to return it to the home! The market is up roughly 20% this year. Take those profits, pay the taxes, and pay down a line of credit that is costing you 8%.

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