HELOC is affecting Refinance rate

[Sayli Mulay]

I want to refinance my primary residence for lower interest rate but I have HELOC on it. Currently it's all paid down. But in order to get the best refi rate I will have to close that heloc… due to subordination. My question is - Is there any way I can keep the line of credit and still get the best rate on first mortgage ?

[Kumar Gaurav]

@Sayli Mulay

I know few people whose rate increased substantially due to a heloc.

I am curious why one would refinance if there is already a heloc available, to reduce interest paid? If reducing interest is the goal wouldn’t it make sense to follow the follow steps?

1) Paydown the principal of existing loan using heloc.

2)Recast the current loan ( instead of refinancing) to lower monthly payments

3) Start using heloc as q checking checking , since the rates are almost zero in a traditional checking account.

This is just one cost effective way of reducing interest costs I can think of and it costs almost nothing

without going through any closing costs.