Monday, September 19, 2011

HELOC - 2 years later

I would love to be debt free, but when I start ranking loans this is one that hasn't hurt too badly over the past couple of years.

This is a home equity loan on our old home....a condo that is now a rental property. On a chance visit to the bank back in January of 2008, somehow they sold me on increasing a $25K line of credit to $100K. Back then, I had no debt other than the small mortgage on the condo. We tapped into the $25K for my husband's business off and on, but we were nowhere near maxing it out.

Four months later, hindsight showed that was the only way we ever would have gotten the house we now live in. I still don't think I've ever told you the whole story about how we found ourselves buying a foreclosure house that had the floor plan of our dreams in one of the top school districts in the nation (and absolutely the best schools in our state). Not to mention it is in a subdivision where my favorite cousin and her family live. It was one of those things where every star had to line up in the sky, one of those things I prayed and prayed and prayed about. But I had to tap the entire $100K for it to happen. Did you know that in Tennessee you have to bring CASH (i.e. Cashier's Checks) to the courthouse steps even before you know what your final bid is going to be??? Let me tell you....for everything to come together like it was one of those things you just had to stand back and know that HE definitely had His hand in this one.

In August, 2009 the balance was $92,711.42. In 2009 my husband received some money from his mother's estate, and we were able to put down about $20,000 on this loan during the year.

This loan has an enviable rate (prime minus a half percent so currently 2.75%). At the time I was very nervous about the variable rate on this loan. Everyone kept talking about coming inflation and rising interest rates. Turns out so far that hasn't happened, but I was nervous enough to take an offer to convert a portion ($73,000) of the balance to a 15 year fixed rate of 4.99%. So yeah, I'm paying more in interest than I could have been, but honestly knowing it is a fixed rate does let me sleep better every night. You must not forget.....I AM old enough to remember double digit interest rates in the early 80's. And the thought of paying 15% on this much of a balance was very nerve-wracking.

Once I finish borrowing out the amount of the assessments over the next couple of months, I'll probably be right back up there near the $72K mark. But for today, the balance is $68,689.11. And the balance on that fixed portion is down to $67,314.11. The other $1,375.00 is at the 2.75% variable rate.

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