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Hi Rowayton,

Dave, I wonder if you would mind explaining why you think HELOC's are the deal of the era.

Not at all!

A) For the first time in the history of institutional financing you are able to place a 2nd position loan behind a 1st with a potentially LOWER rate on the 2nd,

B) The HELOCs are currntly extremely low (starting rates as low as 3 3/4% right now... and if Greenie drops more as rumoured, then ???)

C) The HELOCs are variable, but track with the Federal Prime Rate. Due to the current state of the big picture of the economy (hungover & sluggish, but not crushed) and the understanding of the management style of Mr. Greenspan, who, arguably, holds (much) more power than the U.S. President... it would appear to me (and many others in finance) that the Fed is likely to hold the Prime low for at least a few years, and IF they raise it, will be doing so grudgingly.

Because of this, taking a HELOC is a short-to-midterm aggressive strategy that provides very cheap capital with quite reasonable interest risk.

Dave Donhoff
Mortgage Fool
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