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Snakeoil
Ignore Button. The coward's feature.
Premium
join:2000-08-05
Mentor, OH
kudos:1

House needs some work.

My house needs a new roof, siding, mason work to the chimney. As well as new wood floors [I'd like to rip them out and replace with tile or stone. Reason being stone/tile is more durable]. If not new wood floors, then refurbish what we have. Also have the bottom floor windows replaced. The upstairs widows have been done.

About the only way we can get that work done is through a "home improvement loan". Just kinda curious as to what is needed to get such a loan. I assume little in way of collateral as the home would be used.
--
Is a person a failure for doing nothing? Or is he a failure for trying, and not succeeding at what he is attempting to do? What did you fail at today?.


nunya
LXI 483
Premium,MVM
join:2000-12-23
O Fallon, MO
kudos:13
Reviews:
·Charter
·voip.ms
If you have enough equity, you can get a simple HIL or HELOC. These days, you probably have to have a decent credit rating too for a lender to even consider it.
They'll never give you more than the equity. That's a given.

Another route: Lowe's and Home Depot run credit specials all the time. Recently, I saw HD giving 0% for 24 months on installed roofs. You have to be careful with those, because their credit terms are horrendous after the free period.

You could take one project at a time. Obviously start with the exterior repairs to keep water out.
--
If someone refers to herself / himself as a "guru", they probably aren't.


mityfowl
Premium
join:2000-11-06
Dallas, TX
reply to Snakeoil
If you have the credit and equity as nunya said this is what a refi is for.

bmilone2

join:2001-01-26
Mays Landing, NJ
reply to Snakeoil
I just recently re-did my kitchen (cabinets, counter tops, back splash, flooring and all new appliances). Used the home equity line of credit i had set up with my bank a number of years ago and actually applied to bank to increase credit line by an additional $25,000 for the project.

If you have the available equity in your home banks are very happy to get the business. The interest rate I got is under 5%.

As nunya stated, Lowe's and Home Depot run credit specials on their credit cards for projects. I had looked at the Lowe's one they were running at the time but decided since the Home Equity provided the ability to deduct the interest on my taxes it made more sense.

TheSMJ

join:2009-08-19
Farmington, MI
reply to Snakeoil
I'd suggest keeping the wood floors and spending the money on getting them refinished. Based on what I've read, they're the only type of flooring that's considered to always add value to a home for the lifetime of the house. While other floors can go out of style/wear out over time, wood can always be refinished and stained to a new color dozens of times depending on how thick the planks are.

As for the chimney, depending on how much it's going to cost you might want to look at replacing the appliances attached to it - especially if you already have a HE furnace. As it stands my chimney is connected to my standard water heater and wood burning fireplace since the furnace was already replaced with an HE model venting out the side of the house. Once I install a new fireplace insert the only appliance using the chimney will be the water heater, and it's going to be a lot cheaper to replace the heater with a HE model vs getting any work done on the chimney.

joewho
Premium
join:2004-08-20
Dundee, IL
Reviews:
·Comcast
reply to Snakeoil
We're using some of the HD credit right now. In order to get 24 months you have to spend a certain amount. I think they have terms for 6, 12, and 24 months of interest free credit.

I think re-fi would benefit if the current interest rates are lower than the one you have and you would have only one payment, IF you have substantial equity. Heloc would benefit if you don't have much equity but have credit. JMO.
--

we're all connected


Snakeoil
Ignore Button. The coward's feature.
Premium
join:2000-08-05
Mentor, OH
kudos:1
True, that a refi maybe the cheapest way to go.


Snakeoil
Ignore Button. The coward's feature.
Premium
join:2000-08-05
Mentor, OH
kudos:1
reply to TheSMJ
The chimney is a "decorative" but functional one. By that I mean it's just 3 sides of brick with clay tile in the middle. The hot water heater and Furnace are attached to it. A few years ago we had a new liner installed in it. The chimney is pulling away from house [I suspect due to trees that were planted 10 feet away from it. They have been cut down], and mortar has fallen out of many of the curses of bricks.
I'd like to have it removed, but have been informed that it is needed to provide a "cosmetic" look to the house. Can't have stainless steel vent pipe running up the side of the house. The way you can a barn or shed.

--
Is a person a failure for doing nothing? Or is he a failure for trying, and not succeeding at what he is attempting to do? What did you fail at today?.


DarkHelmet

join:2014-02-21
reply to Snakeoil
A cash out refi would have been the best a year ago. Now the rates are up about .75 to 1%. It might still be the best option I'm not sure how the ROI works out vs a HELOC.


fifty nine

join:2002-09-25
Sussex, NJ
kudos:2
reply to Snakeoil
Consider other options. if you have a 401k you can borrow against it and all the money and interest goes back to you. You can borrow the lesser of half of your account balance OR $50,000.


DarkHelmet

join:2014-02-21

2 recommendations

said by fifty nine:

Consider other options. if you have a 401k you can borrow against it and all the money and interest goes back to you. You can borrow the lesser of half of your account balance OR $50,000.

Never borrow against your 401k. You can never recover the lost interest while your money it out of the market. Not to mention you pay taxes TWICE. Once when you repay it and another when you take it out at retirement. The estimate for most people is for every $10,000 you borrow against your 401k plan you lose about $100,000 at retirement. A 401k is protected from creditors and judgements as well. If you pull it out and something happens it's no longer protected. Just don't do it!!!!!

"5. Never borrow from your 401 (k) plan."
»boston.cbslocal.com/2014/03/03/f ··· 1k-plan/


OldCableGuy2

@communications.net

3 recommendations

reply to fifty nine
Use your 401k? Seriously? UH NO. You should NEVER EVER EVER touch the money in your 401k. There literally is no story that could ever end with "your best best is to take the money out of your 401k for that."

Literally, there is no scenario where that is a good idea. Home improvements are THE WORST USE of your 401k I could imagine.


DarkHelmet

join:2014-02-21

1 recommendation

said by OldCableGuy2 :

Use your 401k? Seriously? UH NO. You should NEVER EVER EVER touch the money in your 401k. There literally is no story that could ever end with "your best best is to take the money out of your 401k for that."

Literally, there is no scenario where that is a good idea. Home improvements are THE WORST USE of your 401k I could imagine.

The only scenario is if you have no credits cards, bad credit, no way to refinance, no cash, and you'll lose everything and be homeless if you don't borrow against your 401k. Aside from the doomsday scenario there's no reason to touch a 401k.


Corehhi

join:2002-01-28
Bluffton, SC
Reviews:
·Hargray Cable

1 recommendation

reply to fifty nine
said by fifty nine:

Consider other options. if you have a 401k you can borrow against it and all the money and interest goes back to you. You can borrow the lesser of half of your account balance OR $50,000.

Don't do that. Bad move all the way around.


dark_star

join:2003-11-14
Louisville
kudos:1
reply to Snakeoil
said by Snakeoil:

new wood floors [I'd like to rip them out and replace with tile or stone. Reason being stone/tile is more durable].

Don't be too sure about that. I have ceramic tile floor in the kitchen of my house, and it looks like crap. Reasons are, it is small tiles that would better suit a bathroom, second, there are dozens of chipped tiles, some of the chips are very major.

Instead of getting a loan and paying interest, sucking equity out of your house, or raiding your 401k, why not pay cash as you go and fix it up a little at a time? The added advantage to that is you get time to think your changes through.


mityfowl
Premium
join:2000-11-06
Dallas, TX

1 edit
reply to Snakeoil
I'm one of the people that disagrees with the go slow and pay as you go club. Normally I would agree.

You have many major repairs that are needed or wanted.

If you are focused and determined with a refi you may get everything fixed in about a year. You'll have 30 years to pay back. Some tax deductions in there. Most people are scattered brained.

Focus and determine all the jobs that you want and need. Do them all at once.

Live in it and enjoy.

Do them


mityfowl
Premium
join:2000-11-06
Dallas, TX
reply to Snakeoil
.


DarkHelmet

join:2014-02-21

1 recommendation

reply to dark_star
said by dark_star:

Instead of getting a loan and paying interest, sucking equity out of your house, or raiding your 401k, why not pay cash as you go and fix it up a little at a time? The added advantage to that is you get time to think your changes through.

Anyone who has a financial advisor or know anything about money management will tell you to suck as much equity out of our house as possible and never pay off your mortgage if you can help it.

That said I'd still fix the place up slowly over time. Keep the bulk of the cash from the refi invested and use the interest every few years to cover a repair. After 6-8 years you'll have your repairs free in a matter of speaking. Then you keep that refi cash invested and at retirement you have 3-4 times as much. Investing it all into your repairs the minute you take it out and it's a complete loss. Make money work for you not you work for it.


tschmidt
Premium,MVM
join:2000-11-12
Milford, NH
kudos:9
Reviews:
·FirstLight Fiber
·Hollis Hosting
·G4 Communications
reply to Snakeoil
I'll chime in with the others tapping your 401k is a bad idea. You want that investment to grow over time. If you borrow against your 401k and loose your job loan becomes due immediately. When I was young and stupid cashed out my 401k when I changed jobs to build a deck. Wish that money was still in my retirement portfolio. Refinance may be cheaper then a home loan but I've never done it so have no experience. Mortgage rates are at historic lows and deductible so finance cost is low.

Since you are tight for money can you do any of the work yourself, sweat equity pays big dividends. Roofing and masonry are unlikely DIY projects but siding might be an option.

Flooring is a personal choice, personally I like wood. Check out what it will cost to have them refinished. You can always replace them later when you are rich and famous.

Prioritize projects, roof if it is leaking is #1, chimney may or may not be salvageable depending on how much damaged to the foundation.

Good luck. I'm in the third year of a window and door replacement project myself. Figure I need to get this done before I become too old and decrepit.

/tom


dark_star

join:2003-11-14
Louisville
kudos:1

2 recommendations

reply to DarkHelmet
said by DarkHelmet:

Anyone who has a financial advisor or know anything about money management will tell you to suck as much equity out of our house as possible and never pay off your mortgage if you can help it.

That is neither true nor correct.


DarkHelmet

join:2014-02-21

4 edits

1 recommendation

said by dark_star:

said by DarkHelmet:

Anyone who has a financial advisor or know anything about money management will tell you to suck as much equity out of our house as possible and never pay off your mortgage if you can help it.

That is neither true nor correct.

Google it and pick any CFP you want. I use Ric Edelman and he's got free articles with all the math on it on his site. I challenge you to prove it wrong. I'm out for whatever makes the most financial sense so if you can prove the pros wrong I'll follow you on it. You don't want to create a new loan aka HELOC to get the equity but via a refi/mortgage you want to get as big of one as possible and pay if off as slow as possible. Then use the extra money you save to generate more money. 20+ years ago this wasn't the case. You wanted to pay off your mortgage but that's not the case in today's world.

The math. I know it's off topic but it's so important people learn this stuff I'm going down this road for their benefit. If you're old school where paying off your mortgage is all you'll hear then don't read this or Google the idea and read any CFP's articles on the new school approach.
»www.edelmanfinancial.com/educati ··· mortgage

nonymous
Premium
join:2003-09-08
Glendale, AZ
reply to DarkHelmet
said by DarkHelmet:

...

Huh? Maybe if everyone is working and has secure jobs. Right now our life is not secure but our house payment is way less tah any current rental. Plus will be over soon enough.
No it is not an investment to us but where we do currently live for at least 10 more years even if part time winter later.
I am not risking that by taking out any more loans no matter how cheap. Most things can be done cheaper than you think with planning and shopping and some of your own labor.
So even if I can not say do the install I can still do the demolition work ahead of time etc.


DarkHelmet

join:2014-02-21
said by nonymous:

I am not risking that by taking out any more loans no matter how cheap.

That's where the problem lies. The risk is having your money sitting in a property that will rise and fall no matter who owns it. A $200,000 house going up to $250,000 will do that whether you own it outright or you have $20,000 invested in it. The difference is I have $180,000 to invest at 5-8% plus I get that same $50,000 increase. You get just the $50,000 increase. In 10 years we both get the same property increase say $100,000 but I have $360,000 on top of that. In another 10 years I have $720,000 more then you as we both get the $150,000 property increase. The risk is in owning your property outright. Even if you need to pay the mortgage with savings because you're unemployed you still come out ahead. Math is pretty black and white.

nonymous
Premium
join:2003-09-08
Glendale, AZ
said by DarkHelmet:

said by nonymous:

I am not risking that by taking out any more loans no matter how cheap.

That's where the problem lies. The risk is having your money sitting in a property that will rise and fall no matter who owns it. A $200,000 house going up to $250,000 will do that whether you own it outright or you have $20,000 invested in it. The difference is I have $180,000 to invest at 5-8% plus I get that same $50,000 increase. You get just the $50,000 increase. In 10 years we both get the same property increase say $100,000 but I have $360,000 on top of that. In another 10 years I have $720,000 more then you as we both get the $150,000 property increase. The risk is in owning your property outright. Even if you need to pay the mortgage with savings because you're unemployed you still come out ahead. Math is pretty black and white.

Unless you have a secure investment it could also go totally belly up. Out the investment and still have the house loan. I will still have a place to live no matter what its price is.
You are counting on always making 8 to 9 percent with no downside.


tschmidt
Premium,MVM
join:2000-11-12
Milford, NH
kudos:9
Reviews:
·FirstLight Fiber
·Hollis Hosting
·G4 Communications
reply to DarkHelmet
said by DarkHelmet:

A $200,000 house going up to $250,000 will do that whether you own it outright or you have $20,000 invested in it. The difference is I have $180,000 to invest at 5-8% plus I get that same $50,000 increase.

Couple of things you are overlooking.

As nonymous See Profile posted you are assuming your investments will earn 5-8% and never loose money. "Past Performance Is No Guarantee of Future Results."

The other thing is if you paying mortgage interest minus the tax deduction your net gain is not nearly as large as you are thinking.

It really all boils down to risk tolerance. If it works for you great. I view our home as a place to live, not an investment. Ideally we will never need to tap the equity (had a mortgage burning party many years ago) and when my wife and I die our kids get a jump start on their retirement when they liquidate the house.

/tom


DarkHelmet

join:2014-02-21
said by tschmidt:

said by DarkHelmet:

A $200,000 house going up to $250,000 will do that whether you own it outright or you have $20,000 invested in it. The difference is I have $180,000 to invest at 5-8% plus I get that same $50,000 increase.

Couple of things you are overlooking.

As nonymous See Profile posted you are assuming your investments will earn 5-8% and never loose money. "Past Performance Is No Guarantee of Future Results."

The other thing is if you paying mortgage interest minus the tax deduction your net gain is not nearly as large as you are thinking.

It really all boils down to risk tolerance. If it works for you great. I view our home as a place to live, not an investment. Ideally we will never need to tap the equity (had a mortgage burning party many years ago) and when my wife and I die our kids get a jump start on their retirement when they liquidate the house.

/tom

Yea it all boils down to personal preference. There is no right or wrong way though the math has held true for decades. No one can put a price on 'peace of mind' which is what you buy with that lost interest by investing in a property.


DarkHelmet

join:2014-02-21
reply to nonymous
said by nonymous:

said by DarkHelmet:

said by nonymous:

I am not risking that by taking out any more loans no matter how cheap.

That's where the problem lies. The risk is having your money sitting in a property that will rise and fall no matter who owns it. A $200,000 house going up to $250,000 will do that whether you own it outright or you have $20,000 invested in it. The difference is I have $180,000 to invest at 5-8% plus I get that same $50,000 increase. You get just the $50,000 increase. In 10 years we both get the same property increase say $100,000 but I have $360,000 on top of that. In another 10 years I have $720,000 more then you as we both get the $150,000 property increase. The risk is in owning your property outright. Even if you need to pay the mortgage with savings because you're unemployed you still come out ahead. Math is pretty black and white.

Unless you have a secure investment it could also go totally belly up. Out the investment and still have the house loan. I will still have a place to live no matter what its price is.
You are counting on always making 8 to 9 percent with no downside.

Which it has done averaged over many many decades reliably. Stuff rises and falls all the time but a net gain is undeniable. Even a 1% gain is more then investing extra into property. If history isn't something you learn or believe then ignore what I said.

nonymous
Premium
join:2003-09-08
Glendale, AZ
said by DarkHelmet:

Which it has done averaged over many many decades reliably. Stuff rises and falls all the time but a net gain is undeniable. Even a 1% gain is more then investing extra into property. If history isn't something you learn or believe then ignore what I said.

But you have money. A super low job for you would be big money for most I guess. If you are married and your wife had say a medical problem and could not work divorce her ass and get a new cash wife. All life is how much you make.
if you lose lose big jump out the window on wall street and you all have the same financial broker on the way down. pretty smash.


Cho Baka
Premium,MVM
join:2000-11-23
there
kudos:2
Reviews:
·TekSavvy DSL
reply to DarkHelmet
Were you around in the early 80's when interest rates hit 18%?

I can see where some math would argue in favour of the path you suggest given current conditions. The problem is that I cannot predict the interest rates over the ~20 years it will take me to pay off my home.
--


DarkHelmet

join:2014-02-21
said by Cho Baka:

Were you around in the early 80's when interest rates hit 18%?

I can see where some math would argue in favour of the path you suggest given current conditions. The problem is that I cannot predict the interest rates over the ~20 years it will take me to pay off my home.

Read the article I posted by Ric Edelman. There's no reason to go down this road when it's been done by many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many many others.