Finance Dave
Thinks s/he gets paid by the post
- Joined
- Mar 29, 2007
- Messages
- 1,884
Well, sorta.
We had a 15-year fixed at 5.375, and were 12 years into it.
We recently opened a HELOC for purchasing rental homes.
After opening, realized that the current HELOC rate is 3.5%, which is almost 2% lower than our mortgage.
So, we used part of the HELOC, paid off our mortgage, and now only owe on the HELOC. Basically we refinanced at a lower rate without realizing that's what we did.
You might wonder "why didn't you just refinance"? Well, the closing costs are typically high here on a refi. But our Credit Union had a deal on HELOCs that the closing costs would be $449, and they would pay $400 of that so long as you keep the HELOC open for 2 years (you don't have to borrow on it, just keep it open). As a result, our total closing costs were $49.
There is one downside...it reduces our liquidity to buy rentals. HOwever, we got a big enough line to buy 3 properties, and this reduces it by 1....so we can still get two, and hopefully have the portion of the HELOC used on our primary residence paid off in 30 months and free this up again.
Essentially this move saved us $7,000 in interest, and allows us to pay off our home in 30 months rather than 36 on the old schedule.

We had a 15-year fixed at 5.375, and were 12 years into it.
We recently opened a HELOC for purchasing rental homes.
After opening, realized that the current HELOC rate is 3.5%, which is almost 2% lower than our mortgage.
So, we used part of the HELOC, paid off our mortgage, and now only owe on the HELOC. Basically we refinanced at a lower rate without realizing that's what we did.
You might wonder "why didn't you just refinance"? Well, the closing costs are typically high here on a refi. But our Credit Union had a deal on HELOCs that the closing costs would be $449, and they would pay $400 of that so long as you keep the HELOC open for 2 years (you don't have to borrow on it, just keep it open). As a result, our total closing costs were $49.
There is one downside...it reduces our liquidity to buy rentals. HOwever, we got a big enough line to buy 3 properties, and this reduces it by 1....so we can still get two, and hopefully have the portion of the HELOC used on our primary residence paid off in 30 months and free this up again.
Essentially this move saved us $7,000 in interest, and allows us to pay off our home in 30 months rather than 36 on the old schedule.