Interest on Debt

[EconoMutt]

I would be interested in an opinion on interest rates.
I currently have $35,000 in debt and use an adjustable rate HELOC.
My HELOC is at 2% until the end of summer. After that it is a prime rate line of credit.
Currently that rate would go to 3.25%

At what point would you go to a fixed rate loan?

FYI- The fixed rate loans are running 6%
I usually pay $1,000 per month toward principal.

[disneysteve]

The problem is that at the same time the adjustable rate goes up, the fixed rates will also go up. In your case, I would probably just pay it off. At $1,000/month, it will be gone in just under 3 years. Rates are probably going up but it likely won't make that big of a difference in that short a time period. Even if the rate jumps 2% per year, you'll end up around 6% which is what the fixed rate would cost you today.

[jIM_Ohio]

Originally Posted by EconoMutt

I would be interested in an opinion on interest rates.
I currently have $35,000 in debt and use an adjustable rate HELOC.
My HELOC is at 2% until the end of summer. After that it is a prime rate line of credit.
Currently that rate would go to 3.25%

At what point would you go to a fixed rate loan?

FYI- The fixed rate loans are running 6%
I usually pay $1,000 per month toward principal.

You would need to weight the following

1) interest on debt paid right now
2) interest on debt paid until loan is paid off
3) any changes to above if loan terms change
4) cash flow you have available to pay off the loan
5) the costs to refinance should be added into the interest paid on any changes to loan

the higher your current cash flow, the less likely you want to refinance IMO. $1000/mo is high cash flow IMO. If you were only paying $300/mo the answers to above favor refinancing.

Another decent comparison is calculate total interest paid with current loan until paid off, then refinance to a 15 year fixed and make same payment you are now, and calculate interest paid in that situation too. The closer the two "interest paid" figures are, the less likely I would refinance.