Took the HELOC at 8.9% over the cash out refi at 7.2% and I'd do it again

Last spring I needed about $45k for a kitchen redo and a new roof, and my lender in Boise pushed the cash out refi hard. I ran the numbers both ways and picked the HELOC even with the higher rate, because the refi would've reset my 3.1% first mortgage on the full balance and cost me close to $9k in closing costs. The HELOC ran me about $400 to open and I can pay it down early with no penalty, which matters since I plan to knock it out in 4 years. The refi only made sense if I was staying put for 15+ years, and I'm not sure I am. Has anyone else done the math and come out the other way?

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hugo_jones14d ago

Man, I have to disagree on this one. That refi at 7.2% only makes sense if you never touch the HELOC and just let it ride, but you said yourself you're paying it off in 4 years, so the extra interest on the HELOC is maybe a couple grand at most versus the 9k in closing costs you dodged. Keeping that 3.1% mortgage untouched is the real win here, and honestly I'd argue the refi almost never pencils out right now unless you're stuck with a high rate to begin with.

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