Mom's home equity line of credit


so my mom talked with the senior loan consultant at the bank she has the LOC. he told her that she could, if she wanted to, pay down some of the principal, and continue to have the LOC open for draws and even extend the LOC past June 07 (when it is scheduled to become a mortgage). he told her that even though the rates are going up, they are not going to go up too much and that they will eventually go back down.

he told her that refinancing the loan, essentially closes out any opportunity to use more of the banks money through the LOC and will end up costing her in closing costs and taxes.

so, she offered to me:

To pay down her loan from 75k (the max) to about 35k using her own money. then, if i ever wanted it, i could use her LOC for any investments, and her return would be me paying for the entire cost of her LOC.

so i would assume payments of her loan, if i ever started to use it. this way, she’s not giving me any money directly, but letting me use her LOC, I just pay for it and she gets the benefit of not having to pay the monthly payments and she gets to write off the interest.

correct me if i’m wrong, but this sounds like the stupidest thing i’ve ever heard…or am i wrong. other than having access to money (approx 40k), if i decided to begin using the money, i would be left with the bill, with no tax benefits. right?

i’m wondering if she could put my business name on her LOC???