Inter­est – Rate vs Cost using 6% Mort­gage and 10% HELOC.

1. WHEN CAN YOU BORROW MONEY BUT NOT BE IN MORE DEBT?
I am a strong advo­cate of get­ting out of debt as soon as pos­si­ble and stay­ing out as long as possible.

The dia­gram below shows how by bor­row­ing $5,000 from a home equity, per­sonal or busi­ness line of credit to use as a principal-only pay­ment to help pay off the bal­ance owing on a mort­gage, you aren’t really get­ting deeper into debt. You are really just repo­si­tion­ing the debt dif­fer­ently. Don’t you still owe the same $200,000 amount  but in a dif­fer­ent con­fig­u­ra­tion? Why do this? Keep reading……

borrow_from_aloc

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