Paying off mortgages?

Probably not. Although the numbers look favorable I assume the only way you are getting a home equity loan at 4% is that it is a variable rate, an ARM.

And rates are very low at the moment. So I think there is a huge risk that a 4% ARM could reset very high and then you might have trouble making the payments.

That 4% could be a teaser rate and that is what is causing all the troubles with the foreclosures, mortgages, and bank failures that is bringing down the country.

If anything, if you can get a 30 year fixed at a lower rate, at least 1% lower you probably should refinance.

But normally a second mortgage, which is what a home equity loan would be, is usually at a much higher rate than the first. So it is likely only a temporary rate which makes it a bad idea.

Oh hell no...

Here's what happens:

Assume 100,000 loan with 40,000 equity

Take a 40,000 equity loan at 4%

Pay 40,000 towards the mortgage

You now have 40,000 equity on a 100,000 loan

AND the same payment on the original loan

AND now a payment on a 40,000 loan at 4%

Don't do this... it is a terrible idea.