I'd appreciate the critical opinions of some of the folks who frequent
this newsgroup and are more experienced and savvy than I regarding home
financing.

Currently, I am about 4.5 years into a 7 year balloon mortgage at 5.5%
fixed. I've paid down the premium balance regularly and expect to have
no problem paying it off fully at the end of the 7 year term (in early
2006) without drawing from long-term investments/assets (which would be
available in an "emergency").

I'm considering paying off the mortgage using a Home Equity Line of
Credit. I qualify for one from a reputable source which has zero
application or "closing" or annual fees, an interest rate which is Prime
MINUS 1%, and a draw period of 10 years -- though, as with the current
mortgage, I plan and expect to have the balance paid off by early 2006.

Of course the variable interest rate of the HELOC is what I am concerned
about. I've looked at the way the Prime has varied in the past (went
back about 50 years) and have found some years (esp late 70's and early
80's) in which it changed, both + and -, A LOT! For example, 1980 it
INCREASED a net of 6.25% during the year. Though the economic and
political environment now is different than late-70s-early-80s, the fact
that the Prime now has virtually nowhere to go but up is a "concern".

I do like the additional flexibility (minimum payment possible and 10
year draw period) offered by the HELOC in case of emergency vs. the
balloon though, as I said, I think the NECESSITY (vs convenience) of
that is pretty unlikely. But nothing's impossible. ;-)

Anyway, I'd truly appreciate hearing pros/cons, cautions, whatever from
folks with experience in home financing.

TIA

BTW, I've checked into fixed interest options but haven't found one that
offerred enough difference from my current mortgage to make it
attractive.