Liquidate Investments to Pay off HELOC?
A good Q&A post from Bankrate today discusses the pros and cons of liquidating stocks (or other investments) to pay off a HELOC with a rising interest rate.
A couple of other considerations:
1. Commissions paid to buy/sell stocks are often overlooked, but need to be considered in making an accurate analysis. Discount brokers have helped bring these fees down, but they still add up. Paying a $30 commission to liquidate $3,000 of stock to pay off HELOC debt means you’ve lost 1% of your principal at the outset.
2. Rising rates have focused attention on variable rate HELOC’s and caused angst for many borrowers. Still, many people overlook the fact that while their HELOC has crept from a 4.50% rate to 6.75%, they continue carrying credit card debt with rates of 12% or more. Try to focus on the highest rate debt in your portfolio when looking to reduce your debt service burden.
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