Ask Terry Questions Pay Down HELOC or Start Saving

Pay Down HELOC or Start Saving

By Terry Savage on January 12, 2014 | Housing / Real Estate

Hi Terry, my husband and I are both 51 and have been married for 20 years. We have a 530k mortgage at 2.75% that is adjustable. We have a HELOC with 169k at 3%. We have lost all of our savings (hundreds of thousands, twice over the years), had to dip into home equity while we were under employed for several years. We are now both working and making around 250K and saved 65k last year. We only have about 20k in retirement accounts. My husband is now maxing his retirement with his work, I am self employed. Should we save money or pay down the HELOC? We plan to refinance to a 15 year, 750k, should start to appreciate again now, we are surrounded by many new million $$ tear down homes. We have no other debts, always have paid credit cards off each month and pay cash for cars. We paid for our sons college tuition with home equity, he is on his own now. Please advise. Thanks, Cathy

Terry Says:  I think you’ve done a great job, all things considered.  But I honestly couldn’t sleep well at night owing $700,000 at rates that could rise dramatically!  I don’t know if your income, or the equity in your home (if any) would qualify you to refi the whole thing.  That would be my first advice, wrap it into one loan, even if you’re paying 4.5-5% — because then you only have to worry about income, not rising monthly payments!  If not, yes, concentrate on paying down that HELOC asap.  I do think rates will rise in the next few years, and when they start to rise it will likely be a sharp increase.  Of course, check your loan documentation, and see what the limits of the total increase can be, as well as the frequency with which rates can rise.

If you’re in Illinois, start at  My resource there for mortgages is Leslie Struthers, and her email is  Her phone is 312) 379-3526.  (I never get any reimbursement for suggesting contacts, just want to save you a lot of aggravation by getting to the people who can really help!)



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