They make excellent points. Your HELOC rate , if variable--and most are such--should be at something LESS than Prime. Say bedtween 0.25%-1.01% Less than Prime, adjusting every month. As of yesterday Prime was 5%, so P-1.01 % would be a 3.99% rate. And the interest may be Tax Deuctible (most are, but there are some exceptions about which the Bank can provide examples that they will likely couch in terms that "you should really contact your Tax Advisor") But for virtually everyone taking out a HELOC where there is signifcant longtime equity, it will be Tax Deductible, making the effective Interest even lower than the 3.99% in the above example. (If, for example, your Incremental Fed Tax Rate is 25%, then the effective Interest would be 25% less than 3.99%, or 3.99 X .75 = 2.993%)
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