I have a $29,000 Line of Credit balance with monthly payments of $330.00. I have been paying $1,458 monthly for ten months. I am selling my house early next year and should make $40,000 profit. I am buying a new home May 1.
Should I continue to make the $1,458 payments on the LOC or should I cut the LOC to $729 and put $729 toward the down payment? My profit after the sale will be less than the LOC and I need $34,800 down on the new home. What should I do?
There are too many variables to consider to provide this type of financial advice. Instead, contact your tax accountant who better understands your fiscal position. Variables which must be considered will be the housing market and what terms you actually agree to six or more months from now, the interest rate on home loans then -- especially as compared to the interest rate on your line of credit now. You may also have tax implications based on the sale of your home and the purchase price of the new home, and available tax deductions may influence all of this too.
Talk to your accountant now to see if it is worth putting funds aside in lieu of paying down the loan early and saving on the long term interest expense on the line. Having those funds in reserve may be helpful as you can then use it for a down payment, pay the line, or mix your pool of funds between them.
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There are too many variables to consider to provide this type of financial advice. Instead, contact your tax accountant who better understands your fiscal position. Variables which must be considered will be the housing market and what terms you actually agree to six or more months from now, the interest rate on home loans then -- especially as compared to the interest rate on your line of credit now. You may also have tax implications based on the sale of your home and the purchase price of the new home, and available tax deductions may influence all of this too.