How did I add $100,000 to our financial capacity?
Posted on August 28, 2026
The $150,000 interest-only HELOC that I got seven years ago was scheduled to expire December 31. If I did nothing, I would be on schedule to pay off the balance, I think that was over 10 years. I just plowed ahead with the steps to get a new HELOC that will expire in in 2036. I had used about $40,000 of my HELOC that rolled over to the new one. I added $100,000 of financial capacity: I now have a $250,000 interest-only HELOC.
In ten years, I’ll have to go through this process again. I hope I get to do that. I’ll be 91!
This post describes the basic steps.
My prior HELOC was with PNC. I just proceeded with them again. I concluded that I wouldn’t find a better rate, but I did not really push to find alternatives.
• The process took five weeks.
• I had to give them the usual documentation: two past tax returns, a recent brokerage statement, recent mortgage statement, recent bank statement, evidence of homeowners insurance with PNC listed as a lender. Those were easy to post on the PNC site for the application. There were a few pesky items, but I’ve already forgotten what they were.
• The $42,000 balance of my current HELOC rolled into it. The $42,000 that accumulated includes a new furnace, three new air conditioners, replacement of the landscape lighting, new dishwasher, new microwave and several fairly major limestone repairs on our patio.
Our home continues to beg for money. I am replacing our asphalt driveway this month; that will be our single biggest home expenditure in the last 20 years – a healthy addition to my HELOC balance.
• My new loan rate is more than I was paying. My new rate is 0.35% above the 6.75% WSJ posted prime rate or 7.1% My prior rate was 0.25% above that measure. We don’t itemize, on our tax return, so that’s 7.1% after taxes.
At current ~3.0% inflation, that’s ~4% real rate as compared to ~6.3% expected average tax-free growth in our retirement accounts (our mix assuming 7.1% for stocks and 2.3% for bonds). If returns are average over the long run, I’ll come out ahead, roughly 2% per year on the amount I borrow.
I don’t really pay +7% interest on my HELOC. For much of the year, my rate is the money market rate. My practice is to sell securities in December to have the amount we will spend in the upcoming year into cash. I’m awash with cash in December. I park most of that into our HELOC. That means I’m not paying 7% interest until I need to tap it for our spending later in the year; I’m forgoing +3.0% interest on money market for most of the year and incurring the 7% rate in the later months in the year.
• I had a $399 origination fee on this loan. I did not have that on my prior HELOC. That raises my effective rate a bit.
• I have a $50 fee each year.
• I owe PNC a fee of about $300 if I close this loan in three years. I had something like that before. I would have to reimburse them for something or another that they will absorb if I don’t close it. Our primary mortgage is a 30-year term loan at 3.1%, so I definitely won’t be refinancing that in the near term; that would likely require closing the HELOC.
Conclusion: I replaced our expiring interest-only HELOC with a new one. I increased the credit limit by $100,000. The process was straightforward. My balance was $42,000 that rolled over to this new HELOC. This HELOC lasts for ten years. I’ll have to go through the same process in ten years.