From: "Steve" 
Newsgroups: misc.invest.real-estate
Subject: Re: Use home equity line of credit as re-fi?
Date: Sat, 27 Dec 2003 17:37:22 GMT


"John A. Weeks III"  wrote in message
news:261220032126190308%john@johnweeks.com...
> In article , Steve
>  wrote:
>
> Interest rates are at a lifetime historic low rate.  There is only
> one way that they can move, and that is up.  So, why not convert this
> on day 1 to a fixed at 6.02%.  That is a heak of a good rate, especially
> given the lack of closing costs.
>

John,

That is certainly something to consider. (And my girlfriend's vote!) I guess
the question is how long will it take for the interest rate to rise by 2%
which currently represents a 300% increase in whatever rate it is they are
indexing.  Since the loan is "only" for 10 years, if my rate rises steadily
from 4% to 8% over the 10 years I do better than taking the 6% off the bat.
Is it likely to rise like that (or faster!)? Sure it is, but it would not
surprise me if it only rose a point or so over the next five years.  Mr.
Greenspan has made it clear that inflation is public enemy number one, and
hopefully he can control as he has for the past decade.  I guess the key is
to make sure that I can afford to pay even at the 7% increase cap. Thanks
for your input though. It is something that I will seriously consider.

Steve