Invest proceeds from home equity loan or pay it off? itt
Please bear in mind that I don't live in the US and am not an expert on US taxes. I do not know whether interest on a HELOC is tax deductible in the US.
You really need to know the effective after tax rate of both your mortgage payments and the HELOC.
Let's suppose, just for purposes of illustration, that your mortgage interest rate is 6%, that it is tax deductible, and that your marginal income tax rate is 50%. Let us assume that the HELOC is not tax deductible. The effective after tax interest rate of your mortgage is 3%. Paying down some mortgage principal with money borrowed at 1.99% gives you a guaranteed net return of 1.01%, provided that you pay off the HELOC at the same rate.
OTOH, if you currently have a mortgage at 3%, and your marginal income tax rate is still 50%, the effective after tax interest rate on your mortgage is only 1.5%, and there is no benefit to paying down principal with the non tax deductible HELOC.
If both the mortgage and the HELOC interest are tax deductible, it's a much simpler decision. If the mortgage interest rate is higher, it's a great opportunity to pay down some principal.
The details matter.