Have you ever opened a HELOC from your house's equity?

Question

My husband and I have about $100K of equity on our home (still paying mortgage). We could open a HELOC at 3.5-5% up to $70K.
Between two car payments we owe $41K at 6-8% interest. Is it a dumb idea to pay off the cars with the HELOC funds so we would have a lower monthly payment with less interest?

Answer

I wouldn’t say its dumb, but it’s not advisable to take out a HELOC to pay off vehicles or any other debt in that matter.

Answer

I wouldn't use a HELOC to pay off car debt. Have you looked into refinancing or doing a personal loan or debt consolidation loan? HELOCs are usually rate variable meaning your interest rate will go up or down depending on if interest rates go up or down. Home equity loans are usually fixed but they are different from HELOCs.

Answer

From a financial standpoint it's never advisable to take out a HELOC to pay for anything geothermal that expenses relating directly to the home. 
Firstly, in the event that you get into financial issues later, the last thing you want is to end up having your hoke in foreclosure due to paying off a car and other revolving expenses. No one knows what the future will hold...especially in this climate.
Secondly, in the event that you have an issue WITH your home, you won't have an credit to fall back on. Should a bearing wall buckle, the roof develop a huge leak, or structural damage become evident you won't have that equity to make repairs. You don't want to have to live in your car becuase your house isn't structurally sound and you can't afford to fix it. 
Steer clear.

Answer

You’re taking away from an appreciating asset to pay off a depreciating asset. I wouldn’t do it. Also, if something happened to you financially, you’d rather they take your car than your house.

Answer

Many of our clients have a collateral backed line of credit with by primary residence or investment portfolios. It is surprisingly common for people to draw lines to buy an investment property, pay for student, credit and auto loans. Interest rates are very low still, it would shop around for the best rate and terms, some banks have promo offers where they give extra discounted rate in the first 6-12 months. Consolidate all outstanding debts, reduce the number of payments, you will end up pay the principal off faster and be able to budget your overall expenses better. I work in financial services, and credits can be an amazing tool if used well and with plans.

Answer

Loan processor here ☺️ I would not open a heloc (home equity line of credit) for car's to be paid off. I would consider refinancing with a cash out option on your home and pay them off that way or go to a local credit union and see about just refinancing the cars.

Answer

Refinance your car loans at your bank rather than take this loan.

Answer

Sit with a loan officer to discuss. But I personally wouldn’t to pay off car debt. I would only do that to better your house and do updates/maintenance. 
I personally would sell both your cars and get ones you can afford. Trade ins are at an all time high right now and you’ll be surprised what you can get. Many dealerships are buying out remainder of loans/leases too right now.

Have you ever opened a HELOC from your house's equity?

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