Plus loans vs home equity/mortgage loans

notrichenough
Wed, 28 Apr 2010 10:30:07 +0000

It seems like a no brainer to refinance our home on a ten year mortgage…

Seems like a good plan in your situation - you get a much lower interest rate, and get to deduct it, too.

4% seems pretty low for a mortgage though, especially for only $100K - is this a variable rate? That carries some risk.

If you are comfortable with a variable rate, you might want to consider getting a HELOC (if legal in your state) rather than refinancing, for a couple of reasons: You don’t pay interest on the money until you use it, and the cost is generally much lower than for getting a mortage. In fact I don’t think I’ve ever paid a dime in closing costs or fees to open a HELOC (not even an appraisal fee), whereas the mortgage will probably cost several thousand at least unless you go for a higher interest rate.