I’ve got a dumb (maybe) question on HELOCs. I am opening a HELOC for a future house renovation as well as potential investing opportunities through BofA. The rack rate isn’t particularly good (prime + 1.625%). But they offer a number of discounts to lower the margin (like .25% for auto pay, etc). One of the ways to lower the rate is to open the HELOC with a balance. Specifically for every $10k of initial balance at funding, the borrower receives .1% discount to the margin they pay over prime for the life of the loan.
I don’t need the cash right now, but is there any reason I shouldn’t open the loan up with a large balance (say 100k) just to reduce the future rate? You can only make the mininmum payment for the first three months, so I would plan on having the money sit in my checking account until after that and then pay it all back. It seems like an easy way to reduce the rate, but are there tax implication or something that I’m missing? Thanks in advance for your help.