In addition to my mortgage I also have a line of credit on the house. It’s an interest only payment (but I always pay well more then the interest). Anyways, since I got the house about 7 months ago, the interest rate on the LOC has gone up almost every month. In quarter percent incrememnts, it’s gone from 6% to 7.25%. What really bugs me is when the minimum payment (interest only) is $100 one month and I pay $200, then the next month it’s $105 becuase of the rate increse. Anyways I put an email into the bank asking about this, but assuming I don’t get an answer I like, I wanted to know if it’s possible to have another bank buy out the line of credit. Can you do that? I know with a regular credit card you can transfer the balance, but this is a secured line (my house) so I don’t know how it works. Any ideas?
You have a HELOC (Home Equity Line of Credit), right? http://www.mtgprofessor.com/A%20-%20Second%20Mortgages/what_is_a_heloc.htm
Most interest only loans, including HELOCs, are interest only. http://www.mtgprofessor.com/Tutorials2/Interest_Only.htm; http://www.thinkglink.com/article.asp?Title=Borrowers_Remorse.htm&ID=1083
You can’t get another bank to “buy” the mortgage, but you can refinance it. Shop around a bit, and you will find fixed rate HELOCs if you still need the credit line.
Good luck.
Apparently I didn’t get enough sleep last night. Let me try again. What I meant was,
Most interest only loans . . . are adjustable rate mortgages (ARMs). If you don’t want your rate to increase, you want a fixed rate mortgage instead of an ARM.