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Paying HELOC off...
Old 04-10-2014, 02:59 PM   #1
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Paying HELOC off...

Currently we have a mortgage and a HELOCCurrently on our home. We have been aggressively paying the HELOCCurrently over the last 5 years and should have it paid of in the next ~4 years. Currently we have some stock vested stock options that we could sell and pay into principal about ~75%. This would decrease our aggressive payoff timeline to about ~1 year.

We have the means to make payments, saveas aggressively as we have been, etc. the stock options are part of the wife's bonus structure and is reluctant to sell options since we have the means to continue down our agreed path w/o affectin our families lifestyle, savings rate etc. I would like to take this subconscious albatross off the books.

Anyone been in this dilemma of sorts and any advice if it makes sense to payoff HELOCCurrently early vs not, etc.

Thanks
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Old 04-10-2014, 03:26 PM   #2
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Unless your HELOC interest rate is particularly high or you have reason to believe the options will lose value then why the hurry?

I have a 3.375% mortgage that I could pay off tomorrow with 5 minutes of keystrokes, but the money that I would use has earned more than triple that over the last few years so I just keep making the scheduled payments and hope my investments continue to do better than 3.375% (which I think they will and am willing to suffer the consequences if they don't).
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Old 04-10-2014, 03:38 PM   #3
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It sounds like you have two questions that are separate, and you are co-mingling them. It is almost always best to look at them separately.

1) Pay off the HELOC (see previous post).

2) Cash in stock options.

What % of your portfolio do the options represent? If a lot, it might be best to diversify. I hate to ask what you think the outlook for the company is, no one has a crystal ball. But even if it seems relatively 'safe', I'd still look to a prudent level of diversification. General rule-of-thumb is no more than 5% in any one individual stock.

And as pb4uski says, if the HELOC rate is low, it isn't a 'dilemma', it's an opportunity (IMO).

-ERD50
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Old 04-10-2014, 03:55 PM   #4
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Rates 4.25 and working on reducing it if possible. Our primary mortgage is at 3.85.

The company is solid and we keep ~10% of our overall portfolio worth of the company stock. If it gets higher we start divesting as needed and comfortable at this level. Given the absence of the crystal ball we are as you suggested prudent and cognoscent in the amount of company stock we hold.

I just hate paying the monthly heloc bill equally as much as I hate paying the cable bill.
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Old 04-10-2014, 04:48 PM   #5
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Put it on auto-pay, then you won't notice it so much.
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Old 04-10-2014, 05:11 PM   #6
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Dump the cable, keep the HELOC. The HELOC makes you money, the cable wastes your time and your money.
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Old 04-12-2014, 10:11 PM   #7
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I suggest keeping a small balance on HELOC--a few dollars. It gives you a lot of flexibility for virtually no cost at that point.

If you pay it off, you don't have it anymore and you may find it hard to get a new one. The rules have changed.
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Old 04-13-2014, 12:03 AM   #8
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My old HELOC just passed out of the end of the draw period. So far it's been impossible to find a new one at anything like comparable rates. A few banks and credit unions in select states seem to have excellent rates, but the prime minus 1 or prime minus 0.75 deals that used to be common are not around anymore. The rules have changed.
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Old 04-13-2014, 09:14 AM   #9
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What happens when the HELOC draw period (typically 10 years, I think) is over? My HELOC has a zero balance, and it's at the 10 year mark in June.

Does the bank simply cancel the whole thing, including recording the removal of any mortgage lien? I'm curious, because during the 2008 financial crisis I recall that my bank was willing to close my HELOC if I would pay a small administrative fee--I said 'No thanks,' of course.

Now, I'd just a soon let the HELOC go away...particularly if they want additional fees to keep it open.
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