Home Equity Debt

We used 98 thousand to 120 thousand line of credit to make major improvements at home. We are very pleased with the improvemnts but now about $ 700 per month in interest only payments. My husband wants us to also have a savings account filled with money in an emergency. I think we should dump the extra money in home equity debt, which will slowly reduce our debt and the payment amount. So if we ever have an emergency we could get the house ready. What do you think we should do?

I agree that it makes little sense to pay 8% on your line of credit, but gained 2% in your savings account. That said, as long as you are sure that the line of credit may not close on you for any reason, you must repay the credit line. You'll save money on interest, and we hope to be able to start paying your credit.

Interest rates have fallen recently, it might even make sense to refinance and roll in this line of credit loan mortgage first. I guess even if your rate is the first + 0%, you're still at 8.25%. First mortgage rates are about 2.5% less than now.

payments relate to the line of credit that are comfortable while saving some of your money per month. For example, if you send to the home in 1000 per month in total, and then send 900 and 100 in a savings drop ... ING has a savings account yielding 4.5% with no minimum balance or legal standards. Of course, you will not become a millionaire with interests like that, but at least it's something.