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.}
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.