[ucodegen]

In addition, on this sentence

If I am an investor and have a brokerage account that offers me a a margin rate then relative to the HELOC the heloc is a saving and not an expense.

What you really have is a comparison between
mortgage interest cost
HELOC interest cost
Broker margin interest cost

The first two are securitized and are generally lower.. but they are all a cost! Hopefully the return on investment offsets it. By the way, if it is not a cost.. then why is it deductible on the 1040 as an investment expense??

[ucodegen]

In addition, on this sentence

If I am an investor and have a brokerage account that offers me a a margin rate then relative to the HELOC the heloc is a saving and not an expense.

What you really have is a comparison between
mortgage interest cost
HELOC interest cost
Broker margin interest cost

The first two are securitized and are generally lower.. but they are all a cost! Hopefully the return on investment offsets it. By the way, if it is not a cost.. then why is it deductible on the 1040 as an investment expense??

[ucodegen]

In addition, on this sentence

If I am an investor and have a brokerage account that offers me a a margin rate then relative to the HELOC the heloc is a saving and not an expense.

What you really have is a comparison between
mortgage interest cost
HELOC interest cost
Broker margin interest cost

The first two are securitized and are generally lower.. but they are all a cost! Hopefully the return on investment offsets it. By the way, if it is not a cost.. then why is it deductible on the 1040 as an investment expense??

[ucodegen]

In addition, on this sentence

If I am an investor and have a brokerage account that offers me a a margin rate then relative to the HELOC the heloc is a saving and not an expense.

What you really have is a comparison between
mortgage interest cost
HELOC interest cost
Broker margin interest cost

The first two are securitized and are generally lower.. but they are all a cost! Hopefully the return on investment offsets it. By the way, if it is not a cost.. then why is it deductible on the 1040 as an investment expense??

[ucodegen]

@Raybyrnes
“HELOCs don’t have a positive yield.. they have a cost. You get charged the interest… it is not paid to you. The interest rate charged on an HELOC is higher than a standard mortgage.”

This analyis is biased and not universally true. If I am an investor and have a brokerage account that offers me a a margin rate then relative to the HELOC the heloc is a saving and not an expense.

Actually it is universally true.

Notice how you change the rules in your second sentance: If I am an investor and have a brokerage account that offers me a a margin rate then relative to the HELOC the heloc is a saving and not an expense.

You just added in investing to the equation to justify your position. Now lets take the comparison of HELOC money versis mortgage money. If you just pay min on an I/O loan and invest the diff or your use and HELOC and invest that money. Which one will give you better return? Of course paying min on an I/O loan (Which is what they were originally meant for before they got offered to just about anyone with or without a pulse). With investing the money, you are just offsetting the cost. Cost is still there. Mortgage money minimizes the cost when compared to HELOC money. I was comparing cost factors between mortgage and HELOC.. investing the diff can be applied to either one and is not limited to HELOC.

You are viewing this thing in a vacuum and not considering the big picture. To me that leaves your mindset closed off and gives 0 credibility to your analysys.

Nope, not considering it in a vacuum. See prev paragraph. You have to isolate variable so you can do accurate comparisons. For example, using the HELOC or I/O mortgage to make sure you have financing for investing activities makes sense… unless you can’t take the mortgage deduction because of AMT… but this may depend upon cost factors in other forms of financing. (I am not even getting into the risk aspect here).

[ucodegen]

@Raybyrnes
“HELOCs don’t have a positive yield.. they have a cost. You get charged the interest… it is not paid to you. The interest rate charged on an HELOC is higher than a standard mortgage.”

This analyis is biased and not universally true. If I am an investor and have a brokerage account that offers me a a margin rate then relative to the HELOC the heloc is a saving and not an expense.

Actually it is universally true.

Notice how you change the rules in your second sentance: If I am an investor and have a brokerage account that offers me a a margin rate then relative to the HELOC the heloc is a saving and not an expense.

You just added in investing to the equation to justify your position. Now lets take the comparison of HELOC money versis mortgage money. If you just pay min on an I/O loan and invest the diff or your use and HELOC and invest that money. Which one will give you better return? Of course paying min on an I/O loan (Which is what they were originally meant for before they got offered to just about anyone with or without a pulse). With investing the money, you are just offsetting the cost. Cost is still there. Mortgage money minimizes the cost when compared to HELOC money. I was comparing cost factors between mortgage and HELOC.. investing the diff can be applied to either one and is not limited to HELOC.

You are viewing this thing in a vacuum and not considering the big picture. To me that leaves your mindset closed off and gives 0 credibility to your analysys.

Nope, not considering it in a vacuum. See prev paragraph. You have to isolate variable so you can do accurate comparisons. For example, using the HELOC or I/O mortgage to make sure you have financing for investing activities makes sense… unless you can’t take the mortgage deduction because of AMT… but this may depend upon cost factors in other forms of financing. (I am not even getting into the risk aspect here).

[ucodegen]

@Raybyrnes
“HELOCs don’t have a positive yield.. they have a cost. You get charged the interest… it is not paid to you. The interest rate charged on an HELOC is higher than a standard mortgage.”

This analyis is biased and not universally true. If I am an investor and have a brokerage account that offers me a a margin rate then relative to the HELOC the heloc is a saving and not an expense.

Actually it is universally true.

Notice how you change the rules in your second sentance: If I am an investor and have a brokerage account that offers me a a margin rate then relative to the HELOC the heloc is a saving and not an expense.

You just added in investing to the equation to justify your position. Now lets take the comparison of HELOC money versis mortgage money. If you just pay min on an I/O loan and invest the diff or your use and HELOC and invest that money. Which one will give you better return? Of course paying min on an I/O loan (Which is what they were originally meant for before they got offered to just about anyone with or without a pulse). With investing the money, you are just offsetting the cost. Cost is still there. Mortgage money minimizes the cost when compared to HELOC money. I was comparing cost factors between mortgage and HELOC.. investing the diff can be applied to either one and is not limited to HELOC.

You are viewing this thing in a vacuum and not considering the big picture. To me that leaves your mindset closed off and gives 0 credibility to your analysys.

Nope, not considering it in a vacuum. See prev paragraph. You have to isolate variable so you can do accurate comparisons. For example, using the HELOC or I/O mortgage to make sure you have financing for investing activities makes sense… unless you can’t take the mortgage deduction because of AMT… but this may depend upon cost factors in other forms of financing. (I am not even getting into the risk aspect here).

[ucodegen]

@Raybyrnes
“HELOCs don’t have a positive yield.. they have a cost. You get charged the interest… it is not paid to you. The interest rate charged on an HELOC is higher than a standard mortgage.”

This analyis is biased and not universally true. If I am an investor and have a brokerage account that offers me a a margin rate then relative to the HELOC the heloc is a saving and not an expense.

Actually it is universally true.

Notice how you change the rules in your second sentance: If I am an investor and have a brokerage account that offers me a a margin rate then relative to the HELOC the heloc is a saving and not an expense.

You just added in investing to the equation to justify your position. Now lets take the comparison of HELOC money versis mortgage money. If you just pay min on an I/O loan and invest the diff or your use and HELOC and invest that money. Which one will give you better return? Of course paying min on an I/O loan (Which is what they were originally meant for before they got offered to just about anyone with or without a pulse). With investing the money, you are just offsetting the cost. Cost is still there. Mortgage money minimizes the cost when compared to HELOC money. I was comparing cost factors between mortgage and HELOC.. investing the diff can be applied to either one and is not limited to HELOC.

You are viewing this thing in a vacuum and not considering the big picture. To me that leaves your mindset closed off and gives 0 credibility to your analysys.

Nope, not considering it in a vacuum. See prev paragraph. You have to isolate variable so you can do accurate comparisons. For example, using the HELOC or I/O mortgage to make sure you have financing for investing activities makes sense… unless you can’t take the mortgage deduction because of AMT… but this may depend upon cost factors in other forms of financing. (I am not even getting into the risk aspect here).

[ucodegen]

I wouln’t say it is the baffle them with bullshit but I would tend to agree tht a lot of this stuff is way easier to manage these days with online billpay and automatic payment .

The baffle them with bullshit was occurring when they stated that the HELOC was cheaper than the mortgage because the duration was shorter. That is just plain not true. 3K carried for 1 month in an HELOC will be more expensive than 3K carried in the mortgage.

[ucodegen]

I wouln’t say it is the baffle them with bullshit but I would tend to agree tht a lot of this stuff is way easier to manage these days with online billpay and automatic payment .

The baffle them with bullshit was occurring when they stated that the HELOC was cheaper than the mortgage because the duration was shorter. That is just plain not true. 3K carried for 1 month in an HELOC will be more expensive than 3K carried in the mortgage.

[ucodegen]

I wouln’t say it is the baffle them with bullshit but I would tend to agree tht a lot of this stuff is way easier to manage these days with online billpay and automatic payment .

The baffle them with bullshit was occurring when they stated that the HELOC was cheaper than the mortgage because the duration was shorter. That is just plain not true. 3K carried for 1 month in an HELOC will be more expensive than 3K carried in the mortgage.

[ucodegen]

I wouln’t say it is the baffle them with bullshit but I would tend to agree tht a lot of this stuff is way easier to manage these days with online billpay and automatic payment .

The baffle them with bullshit was occurring when they stated that the HELOC was cheaper than the mortgage because the duration was shorter. That is just plain not true. 3K carried for 1 month in an HELOC will be more expensive than 3K carried in the mortgage.

[ucodegen]

@Rustico
I understand that, but in effect the yield on the bill paying money by reducing the interest to be paid on the heloc vs. getting a pittance in checking acct. is a net benefit.

Let me see here.. I take out money at 8+%(cost) interest rate to pay down a 6%(cost) loan at an accelerated rate to avoid carrying money in my checking account at 4%(profit) yield?

Doesn’t make sense. See my notes earlier at paying down the most expensive money first. This is normally the procedure to get out of debt. You don’t want to increase the amount in a more expensive source of money. In the above scenario, you want to pay down the HELOC first and then the mortgage because the HELOC is a more expensive source of money.

[ucodegen]

@Rustico
I understand that, but in effect the yield on the bill paying money by reducing the interest to be paid on the heloc vs. getting a pittance in checking acct. is a net benefit.

Let me see here.. I take out money at 8+%(cost) interest rate to pay down a 6%(cost) loan at an accelerated rate to avoid carrying money in my checking account at 4%(profit) yield?

Doesn’t make sense. See my notes earlier at paying down the most expensive money first. This is normally the procedure to get out of debt. You don’t want to increase the amount in a more expensive source of money. In the above scenario, you want to pay down the HELOC first and then the mortgage because the HELOC is a more expensive source of money.

[ucodegen]

@Rustico
I understand that, but in effect the yield on the bill paying money by reducing the interest to be paid on the heloc vs. getting a pittance in checking acct. is a net benefit.

Let me see here.. I take out money at 8+%(cost) interest rate to pay down a 6%(cost) loan at an accelerated rate to avoid carrying money in my checking account at 4%(profit) yield?

Doesn’t make sense. See my notes earlier at paying down the most expensive money first. This is normally the procedure to get out of debt. You don’t want to increase the amount in a more expensive source of money. In the above scenario, you want to pay down the HELOC first and then the mortgage because the HELOC is a more expensive source of money.

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