Pay off mortgage with HELOC?

With your situation the only good reason I can think of would be to use the heloc only as a last resort to buy you time (and money) to sell a house you cannot afford. What if the heloc jumps to 8% in a few years?  Will you be able to qualify and refinace your way out of trouble then? Sounds to me like a very good way get yourself into a finacial tangle down the road. Easy for me to say but cosider getting a second job untill you find a better paying job.

Good luck

Answered by Kwaves at Nov 10, 2009 04:15 PM

THe detail you don't offer is what the remaining term is on your mortgage. If you have very little time left, say 5 years or less, your plan can work. As suggested above, the real issue is what you would do if rates went back up.Is the house still worth more than the mortgage? Any chance of refinancing to a new 30 year fixed? The ARMs or HELOC are an accident waiting to happen (again).

My 5.24% mortgage has about 7 years left to run, and I hesitate to put any of it on my 2.5% HELOC, as the risk is greater than the potential reward.

Answered by JoeTaxpayer at Nov 10, 2009 05:14 PM

If you have a Fannie or Freddie-backed loan, I'd try for a loan modification. Look for eligibility here: http://makinghomeaffordable.gov/

I would not recommend using your HELOC. Depending on how long of a term you have left and if you are underwater or not, you may consider a loan mod, a deed-in-lieu, or a short sale. (If you can rent for less, do so!) Some of these may have tax consequences; seek out a qualified attorney for advice.

-Erica

Answered by ericabiz at Nov 10, 2009 06:53 PM