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HELOC vs. Refinance
Posted by: Pygasus, April 2, 2013 11:48PM
I'm looking to take out 60k to do some remodeling on my house. My wife and I are in 25% tax bracket. From what I can see, most 30yr fixed jumbo refinance rates with cash out are coming in around 4.5%. Come someone advise me as to the best approach -- a HELOC or refinance? I suppose the HELOC could be paid off quicker or left open, but the interest is higher (6 to 7% from what I've seen). Both would be tax deductible since the HELOC money is for renovation. Anyone have any suggestions? Thanks.

Re: HELOC vs. Refinance
Posted by: Art, April 3, 2013 03:32AM
For the same loan amount, the lender would suppose there's less risk to a refi than a HELOC

That includes the presumption that if you default on the loan, the refi lender stands closer in line to collect than does the Heloc holder. Which explains why he would charge you more interest for the Heloc.

Re: HELOC vs. Refinance
Posted by: Drewremedy, May 21, 2013 03:23PM
I personally found a HELOC to be far cheaper and easier to put in place for whatever the local bank had in its easy to do box with a drive by appraisal and no fees --locally 99,000 at 1 over prime with several lock in options.

A true refi was a pile of different fees and paperwork

Shop around a bit.

Then again if it makes sense to refinance to get a lower overall rate --that might make sense --neighbor just did a refinance from about 5.50 % to 3.50% --but lenders are not in business to make it easy to lower thier own rates --may need to shop about so as to have leverage wne you address it to your own lender. .

Re: HELOC vs. Refinance
Posted by: Bill Brown, May 27, 2013 04:30AM
Money borrowed to renovate or otherwise improve a personal residence is acquistion indebtedness. Interest on acquistion indebtedness is fully deductible as long as total mortgage debt on up to two personal residences does not exceed $1,100,000.

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