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Old 10-08-2007, 10:04 AM   #1
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What would YOU do?


We have lived in our home for 23 years and owe $48,000 with about 12 years left on it. It was appraised at $135,000 three years ago BEFORE we did $25,000 in improvments: Surfaced the driveway, completely replaced central heat and air, and added vinyl siding to the non-rock covered portions of the house. I estimate the improvements might have added $12,000 to the value of the home. Now we have enclosed part of the patio to make a 10'X12' laundry room, including plumbing, electrical, tile floor and A/C. By moving the washer/dryer out of the kitchen pantry, we now have a walk in pantry right off the kitchen. We estimate at least $5000 in increased value due to that. The project cost about $5000 funded by a personal line of credit at an interest rate of 7%. Due to some septic repairs, the balance is around $6600. The payments on the $6600 are $60/monthly, however we are paying $100 monthly. Would you refinance for 10 years and pay this loan off or just keep paying $100/month until the balance is retired? [The bank has committed in writing to allow us to continue to use the line of credit as the balance is paid down.}

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Old 10-08-2007, 11:35 AM   #2
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What would YOU do?


As long as there are no pre-payment penalties, I'd probably continue paying as you are now.

If you were to refinance your mortgage, would the rate be better than you are currently paying? The closing costs would be another thing to consider...

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Old 10-08-2007, 12:14 PM   #3
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What would YOU do?


I would keep the line of credit and pay it down as you can. In most cases when a person remortgages to payoff a line of credit they usually end up using the line of credit again and your right back where you started.
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