How do I wisely use a home equity loan?
I bought a house in July 2006 for $ 158,000 and the mortgage today January 2012 is 5 ($ 1041 total per month) with 6.75% 30 year fixed rate. 
I have ,800 equity loan with 3.75% rate from house .
I have ,000 in the bank and I am thinking of paying off my mortgage.
I also own another ,000 house.
+ the fixed 3.75% equity loan expires in 2/1/2015
+ house I bough costs $ 158,000 with 20% down and the mortgage was $ 125,000. January 1st mortgage balance is $ 117,292 +I’m with Bank of America
sorry for the confusion
I paid off the 65000 house.
So I would use the 57292 of home equity and 60000 of my money that I have in the bank to pay off the 117,292 mortgage. Leaving me with 5000 in the bank and a 3.75% mortgage.
When the equity expires it becomes a variable rate to what the market rate is at that time.
Tagged with: bank of america • bough • equity loan • fixed rate • home equity • january 1st • money • mortgage balance • sorry for the confusion • variable rate
Filed under: Fixed Home Equity Loan
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Usually bank of America does wonders
You post is confusing. So basically you are saying you have two houses. One with a monthly mortgage of $1041. Second I assume is paid off with $65k.
I am assuming you are asking if you should use the $87,800 equity loan to pay off your mortgage. The short answer is YES. While it does not change your total mortgage situation, it does change the interest you pay. Instead of paying 6.75% on $117k each month, you would pay 3.75% on 87k + 6.75% on 30k. Which will reduce your monthly payment and your overall interests.
One thing to keep in mind is what happens to your equity loan after 2015, does it become a floating rate? If so, what is the rate? (prime + xx.xx%). Usually if the prime rate is high, you can refinance it to lock in a fixed rate (maybe around 5-6%), which will still be lower than 6.75% most likely.
So yes, do anything to pay off your 6.75% loan. Even if that means taking on a 3.75% loan. (pretty elementary)