Does it make sense to use a home equity line of credit to pay off a first mortgage?
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Does it make sense to use a home equity line of credit to pay off a first mortgage?
Under the right market conditions, yes, particularly if the remaining term of the primary mortgage is relatively short. If the home equity line of credit APR is substantially lower than the fixed rate mortgage (as is currently the case) and the rate cap is low, using a home equity line of credit can be a very sensible, no-fee method to refinance a primary mortgage. Make sure you fully understand the workings of the home equity line of credit index and rate re-sets. There are many calculators on the web that can help you determine whether using a home equity line of credit for this purpose makes economic sense.
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