Market Presents New Challenge: HELOC or Refinance?

Dusty Broderick

With home values at all-time highs and first mortgage rates lower than the current market, many of you are inquiring with us about a home equity line of credit (HELOC) to fund those long-desired remodels, looming college expenses, or down payments for other properties.

We can fully appreciate the desire to keep that incredibly low-rate first mortgage, especially as HELOC’s have been such excellent low-rate tools the past few years. Their biggest drawback – the variable rate – has been entirely kept in check by the Federal Reserve’s unprecedented monetary policy, making them incredibly enticing still.

However, .25% rate hikes by the Federal Reserve in both December and March have increased the base rate on HELOC’s to the key 4.0% threshold, with two more .25% rate hikes now expected before year end. Worse yet, a quick review of the Fed “dot plot” – which indicates the Federal Reserve’s plans for future rate hikes – puts the prime rate for HELOC’s on pace for 6.0% by the end of 2018!

So what does that mean for you?  Simple: if you are considering a HELOC, let’s be sure to fully vet all of your options. Refinancing that low first mortgage at today’s still historically low rates could very well be your best long term option.

Spread the love

Recent Posts



5 Money Mistakes That Could Cost You a Fortune

Hey @SouthwestAir happy to hear the 34 planes you grounded on Thanksgiving Eve “had minimal effect on our operation.” On others - in particular a family travelling with a 3yr old & 18mo old - it meant learning of a 3hr delay AFTER going thru TSA.

More adjustments to FICO scoring coming soon, interesting to see the real-world impact in the coming year.

Just in case you were wondering 😉

Existing home sales feel notably in September. Rates likely the culprit - hard for prices to increase when buying power decreases.

Load More...