Real Estate

Stand Alone Home Equity Line of Credit Question

  • Last Updated:
  • Jun 30th, 2020 6:08 am
[OP]
Newbie
Jun 27, 2020
2 posts
1 upvote

Stand Alone Home Equity Line of Credit Question

Last year we sold our single family home to move out into the country a little and get a condo in June 2019 (yes a condo in the country:) We had a HELOC before we moved, which we were getting paid down but were fortunate once selling to pay off the new condo mortgage. We did however still have some debt remaining and some expenses with the move so had the HELOC transferred/created under the new condo. (Think they call it a Stand Alone HELOC) when i looked it up. We should have it paid off by December or January. The HELOC is for 80K when we took it out against this property but we only had 30k in debt and have not used the HELOV since) Have no idea where we came up with 80k but I think were thinking of emergency situations at the time.

Once it is paid off, should we get a regular bank line of credit? At some point in 2021 we will require a newer vehicle so we will require some sort of LOC (prefer that over a loan). Should we reduce that 80K to a lower number? is it impacting us negatively in any way to have a HELOC on a property we own fully?

Hopefully, I am explaining myself clearly. I'm not very good speaking financials. Thank you kindly
2 replies
Newbie
Dec 3, 2019
76 posts
103 upvotes
No, I'd recommend you keep it for a few reasons among others:
1) The interest rate on your HELOC is going to be lower than unsecured/regular LOC, and likely cheaper than a car loan and
2) Having the HELOC charge will prevent others from trying to fraudulently take out debts against the condo.
3) Not quite as good as an emergency fund since it could get called at any time, but better than nothing at all.
[OP]
Newbie
Jun 27, 2020
2 posts
1 upvote
Thank you so much for the tips. Gives me peace of mind.

I have had this bit of uneasy feeling there is a lien on the condo when we worked hard to sell the house and buy the condo out. Just a mental thing really.

Since we are paying it down quickly and are in solid financial shape, its a good thing to have the low interest. I could definately see how some folks could use it too freely and take a big chunk from the equity in their home. That would be a scarey stressful thing to me.

Thank you again. It gives me peace of mind as we edge closer to retirement.

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