Ldogdotcom

Any time that you can use equity in your house to purchase something else, you'll get a lower rate than a rate secured by something else. Lately, I've been able to get my customers (depending on amount and time, and whether it's variable or fixed, and of course credit score) prime- or at worst, prime plus 50 basis points. But, that's at a variable rate. The good news is (at least at my bank) that rate is essentially "fixed" for 5 years.

In other words, you might have, say, 20 years to pay off a loan, but there is (at least at my bank) no penalty for early payoff. So, if you have equity in your house, you can use it to do whatever you want with. But you might not be able to write the interest off... consult your tax person about that. It's all about itemization.

And something else to look into... here in the state of Florida, we have a neat little thing called a taxwise option. You can get a loan for a car, opt for the "taxwise option" and potentially use the interest as a write off. You're still using the car as the collateral, but putting a lein on your house (but it's only a paper lein, not a real lein- meaning if you default, you still have your house, not your car). But the downside is that you are getting the rate for a car loan, not a Home Equity Loan (HEL) or Prime Equity Loan (PEL). And if you owe any money on things like credit cards and you have equity in your house, you'd be a fool not to consolidate those debts and get rid of them. Now, with interest rates like they are, it is the best time to clean up debts.

And yes, I am in banking.

flyellow

Ok, here's my choices as I see them...............

1.) Use my home equity line of credit, 8% variable rate to buy my S......

2.) Pay cash and be done with it.......

3.) Put down XXX amount and finance the rest traditional loan.......

Not sure if I would trade in a car, the dealer said the market on used is flat due to the amount of tradeins they are getting on the 0% rates elsewhere...........(of course, Honda never goes that low )


So, what do you think I have till April-May to decide...............

DigitalMan

Not a tax person.... but I understand you can deduct 2nd mortgage interest on mortage value upto 100% of the
value of your house. So if you were to take a 2nd above the 100% point you could only deduct upto that point.
I know there are lenders that will loan upto 125% of a homes value!

Hope this helps!

stedge

Yes, it is legal. You are putting the house up, not the car, to secure the loan, so you can deduct the interest. Good thing about them is, you can pay it off fast or slow (at least at the banks I visited). Bad thing is, the interest rate is usually tied to prime, and over a long term might go up.