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Aug 19, 2019 - 9:28:14 AM
69820 posts since 5/9/2007

When I refinanced my house to buy the new car I received a little checkbook with the word HELOC attached to it.
I didn't know what it was at the time,but when I needed a few hundred to relicense the car this year I found out it is a loan spread out over my mortgage payments.
I'll soon find out how much my payments will change because of this $285 check.

I'm kinda glad I didn't know about it for a year.It started with $3,400,available.20 years ago I'd be in trouble with something like this.

Aug 19, 2019 - 11:00:38 AM
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8792 posts since 2/22/2007

Lots of people get in big trouble with these, like when they sell and are underwater with their property value, or they discover that they have already spent all of their equity and have no funds for even a down payment to get started in their next home.
A loan is not "free money" yet too many treat them as exactly that.

Aug 19, 2019 - 11:05:01 AM

69820 posts since 5/9/2007

I expect to learn a lot from seeing the effects of my $285 check.
I believe I can work one down ahead of schedule by increasing the principle payment.

Aug 19, 2019 - 11:15:05 AM
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rcc56

USA

2208 posts since 2/20/2016

You can reduce the accrual of interest by sending in more than the required payment any time you have extra cash.

Disposing of loans of any kind as quickly as possible is always a wise move.

Aug 20, 2019 - 10:25:35 AM

Sawyer

USA

123 posts since 10/31/2013

Home Equity Line of Credit. It's a revolving credit line that works off the available balance of your equity line.

Aug 20, 2019 - 10:33:02 AM

Tobus

USA

1916 posts since 11/17/2015

quote:
Originally posted by rcc56


Disposing of loans of any kind as quickly as possible is always a wise move.


Generally, I agree.  The only place it doesn't make sense to pay off a loan as quickly as possible is for a 0% interest loan like I have on my car.  It was offered by Toyota when I bought my car, as an incentive to buy one of their previous year models that they were trying to get out of inventory.  The loan is costing me nothing in interest, so I think it makes more sense to pay it off via the minimum payments, and keep my money where it can earn interest for me.  I don't have a lot of debt anyway, so keeping this note alive (instead of paying it off) keeps my credit score alive.  Paying off all your debt actually hurts your credit score, in case you do need to borrow money again. 

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