shadyridr said:
stbugs said:
Chadstroma said:
tommyGunZ said:
Another 3/4 rate cut coming next week?
Link
Lot's of talk about this. I love it because it means less to pay on my HELOC.
If they do that, I think I will be writing a check to pay off my wife's minivan, which is at 6.5% right now and not tax deductible. My HELOC is prime -1.01 and another 0.75 cut would put it at 4.74% even before the tax benefit. I have to run the numbers, but I would be interested to see how much sooner I could pay it off with the same payment as today.
I also wonder if bond yields will continue to drop and maybe get us to ridiculous levels for 15/30 year fixed rates. I put a call in to a mortgage guy I have used before whose rates in NC/VA have always been as good as anyone else's and usually better. I don't have an awful rate (5.75%) so I want to be blown away before doing anything since the real after tax difference between that and say 5.25, is @ 0.3%, which takes a while to cover closing costs.
Yeah but cant the HELOC rate go back up at any time?
It can, but it is only a 4 year note, i.e. short term. To put it this way, take 25% and 35% as sample tax deduction savings.At 6.5% and 0 tax savings, the current car rate is 6.5%.
If the Fed drops another 0.75, my HELOC will be at 4.74%.
At 4.74% and 25% tax savings, the current car rate is 3.555%.
At 4.74% and 35% tax savings, the current car rate is 3.081%.
So, the Fed would have to raise rates between 3-3.4% before the BELOC would be worse. So, given the immediate savings and the fact that I don't see the Fed raising the rates that much anytime soon, I think it would be a good choice.