Expert: John Whitehead - 4/25/2004

Question
Dear Sir                       I am looking to refinance a small mortgage, $21,000 princaple @ 8% for 8 more years. I have been offered a choice between a 5.59% rate mortgage loan or a home equity line of credit. I already have the line of credit,but she(the lender) offered to expand it from it's current line of $23,500 to $50,000 and drop the current rate from 4.75% to %4.00.My goal is to lower the mothly payments payments.Can you give me some pros and cons on these two alternatives,and particulary some of the pitfalls?   ......Thank you for your time.  

Answer
Your question deserves more time and space than I can give you in this forum.  Many factors come into play in making your decision, i.e. your age, income, cash reserves, etc..  I can say that the home equity line of credit (HELOC) is an  adjustable interest rate and that interest rates are at the lowest they have been in almost 50 years so the only way they can adjust is UP!