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Location: Not only did I not not fail statistics, but I got an A!!!
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A couple things to think about with a home equity loan...
if you are unable to pay the loan payment you risk your house...with your credit cards now, you don't lose your house/property if you can't pay. I would never recommend using home equity for the purpose to pay credit card debt you are already struggling to pay.
Home equity loans are really good for improvements to your home that will help maintain or improve the equity. For instance we had to take out a home equity loan just recently to pay to have our foundation stabilized(no emergency fund would have ever covered that bill). This is using our equity to do something that maintains the house value. If we didn't do this, we could take a loss of more than $70K when we sell the house not to mention any other damage that may continue to occur.
If you use the money to purchase a car, then again your house is still at risk, rather than just getting a car repossesed.
Although it is difficult, I personally would get a separate loan for the car if you really need one, continue with the credit cards working to get them down and take a smaller home equity loan for the home improvements. This may be harder for the purpose of cash flow, but it keeps things compartmentalized appropriately.
HTH
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Thanks Sarah. That makes a lot of sense. I had only thought "you don't want to use equity if you can help it" but I didn't think about whether the loan was for home improvement or something else.
Can I ask, did you/do you typically have to pay closing costs on a home equity loan?
Just a thought but they have done studies and most people who use something (home eq loan, tax return or other windfall) to pay off cc usually run up the cc's again. I can't remember where I read that but I am sure it was when I was working for the financial planner. He really recommends paying off the cards instead of taking out a loan to pay them off. Does that make sense?
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Well, it is all really personal, but I think I'd have to see the $$ breakdown for debts owed + the total cost of what you need to buy before I made a decision.
Do you have any savings at all? We talked about using a home equity loan for our 10K problem last summer. In the end, the work didn't need to be done, but speaking to an advisor, he recommended doing a partial loan and dipping in to savings too. We tend to have problems with this house that are so expensive that we need to empty the savings. I always wondered if that was a good idea. The answer, of course, is no.
If you don't want to share specifics, or you only want to do it in a pm, that would be fine. I do think using a home equity loan for any sort of "disposable" item like a car is very risky if it is a stretch to buy it in the first place.
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Location: Not only did I not not fail statistics, but I got an A!!!
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Quote:
Originally Posted by mamabear
Can I ask, did you/do you typically have to pay closing costs on a home equity loan?
Our fees and costs associated with the equity loan were about $300. This was on a $50K loan. We could have chosen to have those rolled into the loan, but since we took the loan out for the exact amount of the repair costs, we chose to just pay them at closing. It was super easy...almost too easy if you ask me to get a HEL. I called our bank(USAA) and we could have scheduled our closing for 48 hours from when I called. It was scary how fast they approved it.
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Eek, Sarah, that is scary. I just read on the federal reserve's website, that you can cancel any home equity line of credit or second mortgage within 3 days of closing if you do it in writing and they have to refund every single fee. Because it puts your house at risk.
Location: Not only did I not not fail statistics, but I got an A!!!
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okay...on my $50K equity loan the payment per month is just under $400 so you have a bit of reference on that.
With the amount you have for extra plus the amount you would relieve in the budget if you sold the car, this is what I personally would do...
1. I would sell the car and not the truck...the demon you know is better than the demon you don't know. You know what is up with the $1000 truck, but wouldn't have any idea with a $1000 car
2. use the $ from selling the car to purchase a used minivan as you would like to
3. continue to pay off the credit cards and DO NOT USE THEM FOR ANYTHING
4. If you can pay off a chunk by summer's end AND have not used them for six months, I would then look at the equity loan for the tractor and home improvement. By that time the payments would be lower in your budget and would free up some funds to make the home equity loan payment...make sense?
Right now you just don't seem to have the wiggle room for those large purchases financed over time or not.
ok, first, IF you do this, how are you going to ensure that you don't just run the CC's up again? Do you have a plan for that? I don't think I would buy another junker of a vehicle unless you are prepared to have money set aside for maintainence. If there isn't really money in the budget for maintainence, then you are just setting yourself up for more debt.
Have you considered just doing a straight refi and pulling money out , rather than a HELOC? As long as you keep the amount that you pull out under 80 percent of the value (ok that may have not made sense, lol--- basically if the house appraises for 180, you could pull out 36k), then you wont have to pay PMI and the rate on the entire loan will be lower. I don't like HELO's--- having open ended credit that it against the value of your house is a little scary.
Aren't you also getting back taxes still? That could help buy a commuter for DH? A 4k commuter would probably have a lot of life left in it.
I need to run for a few minutes--- login to yahoo if you have the chance
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Quote:
Originally Posted by Sarahd
1. I would sell the car and not the truck...the demon you know is better than the demon you don't know. You know what is up with the $1000 truck, but wouldn't have any idea with a $1000 car
We have to sell the truck though. I can't fit the kids in it, and I am at a point where we need a car for me that I can fit both kids in. And it's not in good enough shape, and gets horrific mileage, so it can't be a commuter for dh.
However we could get a $3k car and finance a couple thou. ?
Quote:
4. If you can pay off a chunk by summer's end AND have not used them for six months, I would then look at the equity loan for the tractor and home improvement. By that time the payments would be lower in your budget and would free up some funds to make the home equity loan payment...make sense?
Right now you just don't seem to have the wiggle room for those large purchases financed over time or not.
Yes it does make sense. And you are right. We don't have the wiggle room for the home equity payment. We have come to the same conclusion.
Location: Not only did I not not fail statistics, but I got an A!!!
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Quote:
Originally Posted by herc
dang, you aren't yahoo'ing
I don't like HELO's--- having open ended credit that it against the value of your house is a little scary.
Aren't you also getting back taxes still? That could help buy a commuter for DH? A 4k commuter would probably have a lot of life left in it.
I agree with HELOC...for that reason we did a home equity loan...HEL which is just a fancy smancy way of saying 2nd mortgage...ROFL. It is just too scary to have $ attached to my home to "use" whenever I wish on whatever I wish. I thought that is what she was referring to...a loan vs a line of credit(which I would say no way to!).
lol well when i am 1 handed typing (which i am abt 75 percent of the time here), yahooing is often much easier. I managed to slip him down for a min to reply earlier, but it didn't last long.
I still would just look into refi'ing. We have a 1st and 2nd, but did it that way to avoid PMI, and the payments are much higher on 2 seperate ones than one larger. Now you do build equity more quickly for that reason, but still. This is only if you are set on getting money now though.
I think what I would do is this... 400 for water heater, 600 for w/d. 1k for mower and 3k for commuter car (1k from sale of the truck and 2k from taxes). Wait on the tractor-- you can often get a better deal in fall anyway.
uck nak again and 1 haded typing when i am trying to be articulate sucks-- more later
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