Can a Line of Credit be re-financed? Is it like a mortgage, with a term?
HELOCs typically have a 10 year draw and 5 year payback. During the draw time you can pay interest only if you wish. The rate can range from Prime minus 1.5 to Prime plus (quite a bit).  Of course, you can always shop around for a better deal than you currently have so long as you have equity in your home. You can often convert the outstanding balance of a HELOC into a fixed-rate home equity loan, generally with the same bank.  Doing this can open possibilities to extend the term allowing for lower monthly payments, but resulting in a larger overall payoff cost. Most HELOCs allow for an interest-only payment or in some cases no-payment at all if you still have unused available credit. Not advising that you do this. If you are struggling with the size of the payment converting to a fixed-rate, fixed-term loan may be what you need. The key will be getting the term such that you can manage both the principal and interest that will be included in the payment.
The short answer is, with limited credit, your best bet might be an FHA loan for first time buyers.  They only require 3.5% down (if I recall the number right), and you can qualify for their loan programs with a credit score as low as 580. The problem is that even if you were to add new credit lines (such as signing up for new credit cards, etc.), they still take time to have a positive effect on your credit.  First, your score takes a bit of a hit with each new hard inquiry by a prospective creditor, then your score will dip slightly when a new credit account is first added. While your credit score will improve somewhat within a few months of adding new credit and you begin to show payment history on those accounts, your average age of accounts needs to be two years or older for the best effect, assuming you're making all of the payments on time. A good happy medium is to have between 7 and 10 credit lines on your credit history, and to make sure it's a mix of account types, such as store cards, installment loans, and credit cards, to show that you can handle various types of credit. Be careful not to add TOO much credit, because it affects your debt-to-income ratio, and that will have a negative effect on your ability to obtain mortgage financing. I really suggest that you look at some of the sites which offer free credit scores, because some of them provide great advice and tips on how to achieve what you're trying to do.  They also offer credit score simulators, which can help you understand how your score might change if, for instance, you add new credit cards, pay off existing cards, or take on installment loans.  It's well worth checking out. I hope this helps.  Good luck! A Home Equity Line Of Credit (HELOC) is simply a special type of secured credit. Secured credit is credit provided to you, where the lender has some rights to an associated asset in the event that you default. In the case of a HELOC, much like a mortgage, if you default on the payment terms, the bank may be legally able to foreclose on your house, sell the foreclosed property, and take the money owed to it from the proceeds, leaving you with any net remainder. Whether your friend will be able to have a bank offer her credit secured against her business assets would depend on a variety of factors. She should talk to her bank to see whether it would be possible in her case. I went here: Consumer Loan Law. It seems that a consumer loan is anything other than a business loan or mortgage.  However, in California it seems to include a mortgage. It's a bit weird to see that a HEL can be considered a consumer loan even if it is the primary or the only loan on a property.  Getting a HEL can be a great low cost way to (re)finance a property as they tend to have low or no closing costs and lower interest rates. The eligibilty of the deduction is based on what the borrowed money is used to purchase and NOT what asset is used as collateral.  So at the beginning of your mortgage, 10% of the interest is deductible because the entire loan was used to purchase the condo.  But when you withdraw money from the account the additional interest is usually not deductible.  It can get confusing with all the withdrawals and payments that will be coming in and out of the account if you happen to use it a lot like a chequing account. An easy example would be if you only paid the interest on the loan...  Say you had a $100 000 loan at 5% APY (for simplicity's sake).  After one year, you would have paid $5000 interest.  $500 of the would be deductible given that your office is 10% of the condo.  Then you buy a $1000 couch and continue to only pay interest for the next year.  You would have paid $5100 interest...  $5000 on money borrowed to buy the condo, and $100 on money borrowed to buy the couch.  So you can still only deduct $500. What happens when you pay back $500 against the line of credit?  Could you designate that 100% of the money should be applied to the non-deductible interest?  Or does it have to applied proportionally?  I don't know. I think it'd would be wise to separate the loans somehow.  Manulife may even have some tools to facilitate that.  However, I wouldn't recommend the Manulife One product.  I looked into when I was buying my house two years ago, and at that time it was too expensive.  The rate was the same that other banks were charging for a home equity line of credit (which was prime at the time).  You can replicate the Manulife One in a cheaper way using a traditional mortgage and a home equity line of credit...  The majority of the loan will be the traditional mortgage at (hopefully) a cheap rate.  Then you can use your line of credit as the chequing account. "If I understand you situation correctly, then the accepted answer is extremely misleading and incorrect. Your arrangement with your parents is definitely unreasonable. It is definitely not ""similar to an interest-only loan"". In an interest-only loan, like you can get from a bank, you will loan a sum of money, which you are expected to pay back at a certain time in the future, or when you sell the condo. But you pay back the original sum, not the value of property at selling time. For the access to the money you pay an interest to the bank. The bank gets their profits from the interest. The property only serves as collateral in case you are not able to make your interest payments.  Another way to view it, is that your parent bought (a share of) your condo for investment reasons. In that case, they would expect to get their profits from the increase of the value of the property over time. That looks most like your situation. Granted, that is more risky for them, but that is what they choose to sign up for. But in that case it is not reasonable to charge your for interest as well, because that would mean they would get double profits. So how does the $500 monthly payment fit in? If it is interest, then it would work out to a yearly interest of about 5.2%. Where I live, that would nowadays be extremely high even for an interest-only mortgage from a bank. But I don't live in the USA, so don't know whether that is true there. I think in your situation, the $500 can only be seen as rent. Whether that is reasonable for your situation I cannot judge from here. It should be 75% of a reasonable rent for a condo like that. But in that case, your parents should also stand for 75% of the maintenance costs of the property, which you don't mention, and most of the property taxes and insurance fees. In short, no it is not a reasonable arrangement. You would be better of trying to get a morgage from the bank, and buy out your parents with it." "a link to this article grabbed my Interest as I was browsing the site for something totally unrelated to finance.  Your question is not silly - I'm not a financial expert, but I've been in your situation several times with Carmax Auto Finance (CAF) in particular. A lot of people probably thought you don't understand how financing works - but your Car Loan set up is EXACTLY how CAF Financing works, which I've used several times. Just some background info to anyone else reading this - unlike most other Simple Interest Car Financing, with CAF, they calculate per-diem based on your principal balance, and recalculate it every time you make a payment, regardless of when your actual due date was.  But here's what makes CAF financing particularly fair - when you do make a payment, your per-diem since your last payment accrued X dollars, and that's your interest portion that is subtracted first from your payment (and obviously per-diem goes down faster the more you pay in a payment), and then EVerything else, including Any extra payments you make - goes to Principal. You do not have to specify that the extra payment(S) are principal only. If your payment amount per month is $500 and you give them 11 payments of $500 - the first $500 will have a small portion go to interest accrued since the last payment - depending on the per-diem that was recalculated, and then EVERYTHING ELSE goes to principal and STILL PUSHES YOUR NEXT DUE DATE (I prefer to break up extra payments as precisely the amount due per month, so that my intention is clear - pay the extra as a payment for the next month, and the one after that, etc, and keep pushing my next due date). That last point of pushing your next due date is the key  - not all car financing companies do that. A lot of them will let you pay to principal yes, but you're still due next month. With CAF, you can have your cake, and eat it too. I worked for them in College - I know their financing system in and out, and I've always financed with them for that very reason.  So, back to the question - should you keep the loan alive, albeit for a small amount. My unprofessional answer is yes! Car loans are very powerful in your credit report because they are installment accounts (same as Mortgages, and other accounts that you pay down to 0 and the loan is closed). Credit cards, are revolving accounts, and don't offer as much bang for your money - unless you are savvy in manipulating your card balances - take it up one month, take it down to 0 the next month, etc. I play those games a lot - but I always find mortgage and auto loans make the best impact.  I do exactly what you do myself - I pay off the car down to about $500 (I actually make several small payments each equal to the agreed upon Monthly payment because their system automatically treats that as a payment for the next month due, and the one after that, etc - on top of paying it all to principal as I mentioned).  DO NOT leave a dollar, as another reader mentioned - they have a ""good will"" threshold, I can't remember how much - probably $50, for which they will consider the account paid off, and close it out. So, if your concern is throwing away free money but you still want the account alive, your ""sweet spot"" where you can be sure the loan is not closed, is probably around $100.  BUT....something else important to consider if you decide to go with that strategy of keeping the account alive (which I recommend). In my case, CAF will adjust down your next payment due, if it's less than the principal left. SO, let's say your regular payment is $400 and you only leave a $100, your next payment due is $100 (and it will go up a few cents each month because of the small per-diem), and that is exactly what CAF will report to the credit bureaus as your monthly obligation - which sucks because now your awesome car payment history looks like you've only been paying $100 every month - so, leave something close to one month's payment (yes, the interest accrued will be higher - but I'm not a penny-pincher when the reward is worth it - if you left $400 for 1.5 years at 10% APR - that equates to about $50 interest for that entire time - well worth it in my books. Sorry for rambling a lot, I suck myself into these debates all the time :)" "Hi, I'm not sure what you're looking for, but I'll assume you are just looking for some distinguishing characteristics of an infra deal.  Infra deals are typically:  - Project financed meaning that a Special Purpose Company (SPC) is established to build and operate the asset. Project finance means that the SPC is quarantined from any party and is backed by the cashflows of the project and not by the balance sheet of some parent entity  - The SPC's cashflows are backed by a lengthy concession agreement (e.g. a government body provides a concession to a private party to operate the infrastructure asset for *say* 30 years). The concession agreement can best be thought of as a form of guarantee provided by the government body. The exact terms of the agreement will vary but something like ""you can operate this toll road for 30 years and charge $x per vehicle, indexed at y% p.a."" should give you the idea of what a concession agreement is.   - Because the concession agreement acts a bit like a guarantee over the cashflows of the SPC it makes longer term and higher leveraged financing more plausible. Imagine a national tollroad asset where the AAA-credit rated government body guaranteed 20m cars a year for 30 years with a $5 toll charge. Your tollroad SPC now has $100m of cashflow every year for 30 years which is AAA-credit rated. This should enable you to get competitively priced long term capital and to gear the SPC at much higher rates than non-infra deals.  - At the end of the concession period the SPC hands the asset back to the government completely unencumbered (debt-free)  So in a nutshell, a government body grants a concession to a SPC that guarantees its cashflows over a long term. The SPC is then financed based purely on this guarantee. The SPC then Builds the asset, Operates it and then at the end of the concession period Transfers it back to the government (google Build-Operate-Transfer or BOT for more detail if curious).    There are plenty of other distinguishing characteristics and a truck-load of detail that I have completely skipped/ignored so others may want to jump-in/ridicule me.  Good luck with your interview.  edit: formatting" tl;dr: I think you can find a much better deal. Doing a strait refi will cost you some amount of money.  However, a 2.5% fee ont top of closing costs seems really high.  You can get a quote from Quicken loans pretty quick and compare their fee.  Also I would check with a local bank, preferably one you already do business with.  The 2.5% is probably their commission for originating the loan.  If you are in the Southeast I have had great luck with Regions bank.  They are large enough, but also small enough.  Please know that I have no affiliation with either company. BTW the rate also seems high.  Doing a quick search of Bank Rate, it seems you can get 3.25% with zero fee as of this writing.  The worse deal they show is 3.46 with a .75% fee, much better than you were quoted. If you can afford it I would also encourage you to think outside the box.  A client of mine was able to obtain a Home Equity Loan (not line of credit) to replace their mortgage.  They went for a 7 year pay off, with the loan in first position, at a rate about .75 below the then current 15 year rate.  The key was there was zero closing costs.  It saved them quite a bit of money. Also look at a 10 year fixed.  It might not be much more than you are paying now.