Why would I ever want to refinance my 2.5% line of credit???

   Were you one of the ones who took out a monster line of credit a few years back, because you could? Well there were plenty of you that did. And what a brilliant decision you made huh? Where else could you get a payment that low for that amount of money borrowed? Why would you want to refinance a 100K loan at 2.5% to a fixed rate that is higher?

Let’s assume the prime rate (the tool used in adjusting your line of credit) remains low for a bit longer. Eventually, when government debt must be repaid and inflation hits – (all the experts say it’s coming) mortgage rates will hit double digits. It’s a fact. History repeats itself. To see in black and white what that could mean to you, look at a few examples below, based on the prime rate historical index.

Let’s assume your rate today is set at prime (3.25%) - .75 which would be a rate of 2.5% 

                                                                 100K balance    250K balance

2009 - @ 2.5% monthly payment -          $208           $520             

2008 - @ 5% monthly payment -             $416             $1041

2006 - @ 8.25% monthly payment -       $708             $1718

1989 - @ 11.5% monthly payment -       $958              $2395

1979 - @ 21.5% monthly payment -       $1791           $4479