HELOCS - Do you have one? (credit, house, buyers)

[aramax666]

In the light of the constant coverage of Janet Yellen potentially raising rates, I was starting to worry that my HELOC payments are bound to go up soon.

In the present housing market, it is difficult to be competitive with less than 20%, and I was wondering if there were a lot of CD forum members who also have HELOCs. I was wondering did they take on a HELOC during purchase like I did, or did they take out a HELOC later in their home -ownership.

What are people doing with their HELOCS? Paying them down? Or just sitting tight?

Would love to hear from others on how they manage their risk of having HELOCs.

[phantompilot]

I have one, but its at 2.75%, so I don't care much. If rates rise enough to change the calculus, you can always take money out of an investment that earns less than the HELOC. I took it out later in home ownership just to use some of the equity for investments which turned out to be a wise move, and with the CA market oscillating between bubble and collapse, there's really no downside to doing that.

So don't worry - my advice to recent buyers (who may have more than 20% in) don't leave too much excess equity in your house if you can avoid it. Park it in a low risk fund - even a low ROR is better than keeping it in the house and losing it when the worm turns. Which it always does.

[jbunniii]

I have one which I opened a year or two after I bought my house. It's not very big - just a $50k line of credit (I didn't want a larger one), intended to be a "just in case" quick source of funds. The rate was 3.5% when I opened it, but my credit union dropped the rate to 1.9% last year, so I decided to use it instead of paying cash when I replaced my roof this year. That's almost free money, hard to refuse. I will pay it off if/when the rate increases.