Home Equity Line question

[Enuff2Eat]

hello, I have a question and would like some advice about HELOC. I have around $200k on my home that I used on HELOC at 3% which come out to be around $400/mon in interest. I also have around $50k collecting .5% interest in my saving.

The question is should I take $50k and apply it to my HELOC or just keep in my saving... in case.. Looking forward for your advice. thanks

enuff

 

[Meadbh]

Good question. Is the 50k your emergency fund? When did you last have an emergency that required you to draw down on savings? If the answer is never, then it might make sense to use the HELOC as your emergency fund and put the 50k, or a portion of it, against the HELOC.

Personally, I was in a similar situation, but I like to keep a few k in savings for those unpredictable needs that crop up on a not infrequent basis. Maybe 5-10k, but not 50k. By sweeping excess savings into the HELOC on a regular basis I reduced the balance of the HELOC to zero, but it is still available if I need it.

 

[Original Wally]

Agree w/ Meadbh, BUT be sure to read the HELOC docs and to determine the conditions where they can refuse to allow an advance against the HELOC. It would be WORST of both worlds to pay down and then NOT be able to ramp it back up if an emergency arose. Always know your "terms and conditions".

 

[Enuff2Eat]

Meadbh and AWeinel,

thanks, it's hard to let that money goes because it does take awhile to save up. We probably won't need it for anything yet. So, I should pay down my HELOC and check "term and condition".

enuff

 

[REWahoo]

I agree with the suggestions above and you might also consider holding on to $10K or so in your savings. That way you'd still have a small emergency fund in addition to the ability to draw on your HELOC if needed.

Just a thought...