Quote:
Originally Posted by F32Fleet
IMO the key to this approach is having sufficient cash flow to pay off the HELOC couple of years. For example 5 yrs would be $1,666/mo on top of your monthly debt payments.
It also looks like you gain "double-deductibilty" of mortgage interest. You get an additional bump in mortgage interest deduction because the balance used to calculate the interest for the monthly HELOC payment includes the monthly interest portion of the monthly payments you're making on the existing first mortgage. Of course we all know that there's a limit to how much interest one can deduct before the AMT kicks in.
Interest on HELOC is calculated off the daily balance and the rate is always some index (i.e. WSJ Prime rate from previous month) plus margin (1,2,3% etc).
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You might want to read this:
https://www.irs.gov/newsroom/interes...-under-new-law
As it applies to this discussion about using a HELOC to help consolidate existing debt, you won't be able to deduct the interest payments.