I was thinking of a second mortgage line of credit which is locked in at 9% for three years, then is

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@ prime rate + 1%. The loan is an interest only loan, we have 100% intentions of selling our home and moving before the three year locked rate is up, this is a second mortgage line of credit, anyone out there with banking loan knowledge see anything wrong with using this type of loan short term for a lower payment? They did include a $300 (pre-payment) fee if we end this loan with in the first three years but I am thinking that might be the least of our concerns correct? . Thanks for your help and time answering here :)

I was thinking of a second mortgage line of credit which is locked in at 9% for three years, then is variable?

You don't say how much the loan is or why you want (or need) the extra money now. You should look at the total costs to borrow (which may be significant) and the total cost of the loan over the term which you intend to keep it; say 3 years. That will give you an idea of how much the credit will actually cost you. It will be higher than 9%, especially if you plan on keeping it only short term.

Won't you need this equity to purchase a new home when you sell yours? What you are really doing is borrowing against the home that you plan to buy when you leave here unless you plan on moving down significantly or renting. It is not advisable to do this unless you absolutely have to. Debt is debt and digging yourself in deeper usually does not make sense. Particularly where you are repaying interest only.

Finally, what happens if there is a downturn in the market and you cannot sell your home when you want to? Will you be comfortable with the payments once they are adjustable? When is the balloon on the loan due?

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I was thinking of a second mortgage line of credit which is locked in at 9% for three years, then is

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