You pay 6% on 300000 K average outstanding balance for 30 days. 18000
If I pay 7 % on my money but I lower the outstanding balance to 250000 I can have a higher rate and lower my overall cost. 17500
So you have $250,000 @ 6% AND $50,000 @ 7% for 30 days.
You must be rounding heavily in your numbers. 300,000 @ 6% for 30 days is: $1479.45.
300,000 for 1 year is $18,000.
So a month’s worth of comparison.
$300,000 @ 6% for 30 days = $1479.45
$250,000 @ 6% and $50,000 @ 7% for 30 days = $1520.55
($1232.88 for the 6%, $287.67 for the 7% – ignoring any financing charges)
Now at the end of this month.. where does the $50,000 come from to clear out the HELOC? Instead of doing the HELOC, why not put the full $50K against the mortgage? You will not incur the additional ($1520.55 – $1479.45 = $41.10) not including financing and other fees.
As for costs. If you don’t recognise opportunity cost uield positive or negative outcome, again pick up any basic finance or accounting texbook and they will cover that for you.
I have, in fact I have a library of books… the ones you use if you are going for a degree in finance, emphasis in corporate accounting.
If you don’t like the math don’t play the game.
Umm.. I have no problems with the math.. do you?
