HELOCS: School me

[lilcoop03]

Has anybody used a home equity loan or home equity line of credit to do some home improvements? I've always read that they are good to use for remodels, etc bc you are adding the value right back to your home. I have paid out of pocket for several things I have done so far but there is a lot more I would like to get done before this November when our first baby arrives. Here is the list in order of priority:

1. Add walk-in closet to master bed room
2. Remodel master bath shower and change from single sink to double vanity
3. Do some painting ($2300)
4. Reseal driveway ($4300)


I would like to do most of this myself, but I work 50+ hours a week plus I am working on my Master's Degree and my wife is pregnant so I don't really have the time..


I'm getting quotes on #1 and #2 this evening..


I believe I have about $60-$70k in equity in the house but I am also interested in refinancing hopefully when rates hit rock bottom from all this COVID crap going on.


Any insight and advice is appreciated!


Thanks

 

[ford fanatic]

We refi'ed 5 years ago and took a cash out loan to do home improvements. But of course it wasn't enough. Took out a HELOC to finish our projects and have since paid it off, but it's still open and available.

If you're looking to refinance anyway, i'd look into a cash out refi. Bonus is you get a better rate too.

 

[SID297]

Save up and pay cash for the work.

 

[Blkkbgt]

Save up and pay cash for the work.

This!!!

I never recommend taking out loans for upgrades. You'll be better off in the long run financially especially with a child on the way.

Pick a project and complete it then move on to the next but ONLY after its 100% done.

 

[nxhappy]

I wouldn't do anything right now, the market is too volatile. I also think it is a bad idea to take out a loan. You are better off knocking out each project one by one with cash earned.

 

[08mojo]

If you have equity in the home and don't plan to be there for the rest of your life, I'd go for the cash out refinance. As others have said, be careful with the market, $60-70k in equity is not that much and you could find yourself upside down--but again, it's all based on how long you plan to be there.

We recently did a cash out refinance , but we had 60% equity in our home (owed 40% of home value). Refinancing got us a better rate, dumped PMI, and we still retained 40% equity in our home. So, should we move in the near term, we'll still be okay and have positive equity in our home. Most cash out refinances cap you at 80% of the homes value--so weigh your options.

 

[lilcoop03]

This is probably our forever home.. I owe around $230k but it should appraise for $300k or more.

Paying cash is an option but with the fed rates at 0, I was thinking I could get a killer rate on a HELOC.

I don't like loans or owing anyone money either but was thinking of taking advantage of this shitty situation...LoL

I do worry about the value going down with a recession, but I know it will eventually come back..But Like I said, we will likely stay in this house forever

 

[ford fanatic]

This is probably our forever home.. I owe around $230k but it should appraise for $300k or more.

Paying cash is an option but with the fed rates at 0, I was thinking I could get a killer rate on a HELOC.

I don't like loans or owing anyone money either but was thinking of taking advantage of this shitty situation...LoL

I do worry about the value going down with a recession, but I know it will eventually come back..But Like I said, we will likely stay in this house forever

Of course everyone is telling you to "pay cash". This is the same forum where guys can't wait to borrow money for 84 months on a depreciating asset and would rather invest in the stock market rather than pay down their mortgage lol. I wonder how that's working out for them now...?

We put $175K worth of cash out refi (and a small HELOC) into our home in the last 5 years. We owe $250K and it's worth over $600K. While I would have liked to paid cash, it would have taken double or triple the time to get things done.

 

[HuntFishCobra]

It's always a hard pill to swallow doing stuff in cash but after the fact you'll be so glad you did. We did our shop in cash. DIY'd the gravel driveway, landscaping, electrical (didn't kill myself), and our fence (quoted $11k no gates wtf). I look at the HELOC as a rainy day fund now since we have a buttload of equity. We're very lucky that we made a decent amount selling our first house and saved a bunch over the years and both work, so i realize not everyone is in that situation but if you can swing it do it.

 

[lilcoop03]

Cash is an option, but it may slow down checking off the list a bit..

I am in the middle of paying for my MBA.. If it wasn't for that, I wouldn't have even created this thread and the list would be done already

 

[08mojo]

with rates being so low right now...I'd take a low cost loan everytime vs laying out the cash. It may not be the popular opinion here, but i'd rather keep cash reserves for these uncertain times (and for the more certain times). That said, it's entirely dependent on the loan you are able to obtain...but very low single digit rates are very attractive.

 

[Blkkbgt]

Of course everyone is telling you to "pay cash". This is the same forum where guys can't wait to borrow money for 84 months on a depreciating asset and would rather invest in the stock market rather than pay down their mortgage lol. I wonder how that's working out for them now...?

Yes because that is LITERALLY every single one of us. Lol.

 

[nxhappy]

Of course everyone is telling you to "pay cash". This is the same forum where guys can't wait to borrow money for 84 months on a depreciating asset and would rather invest in the stock market rather than pay down their mortgage lol. I wonder how that's working out for them now...?

We put $175K worth of cash out refi (and a small HELOC) into our home in the last 5 years. We owe $250K and it's worth over $600K. While I would have liked to paid cash, it would have taken double or triple the time to get things done.

we are about to hit another recession. LAST thing you want to do is borrow money, or spend money in general. Trust me gents ....a huge shit storm is coming and our market will be ****ED for 12 months

 

[nxhappy]

keep cash reserves for these uncertain times

smartest shit ive heard all week from anybody ...

 

[Adower]

Of course everyone is telling you to "pay cash". This is the same forum where guys can't wait to borrow money for 84 months on a depreciating asset and would rather invest in the stock market rather than pay down their mortgage lol. I wonder how that's working out for them now...?

We put $175K worth of cash out refi (and a small HELOC) into our home in the last 5 years. We owe $250K and it's worth over $600K. While I would have liked to paid cash, it would have taken double or triple the time to get things done.

Why would you pay down on a house versus invest unless you have a crazy high interest rate. The S&P 500 has returned 9% over the last 30 years. My mortgage rate is 3.25%. Id take that 9% with compound interest any day.

 

[rborden]

Has anybody used a home equity loan or home equity line of credit to do some home improvements? I've always read that they are good to use for remodels, etc bc you are adding the value right back to your home. I have paid out of pocket for several things I have done so far but there is a lot more I would like to get done before this November when our first baby arrives. Here is the list in order of priority:

1. Add walk-in closet to master bed room
2. Remodel master bath shower and change from single sink to double vanity
3. Do some painting ($2300)
4. Reseal driveway ($4300)


I would like to do most of this myself, but I work 50+ hours a week plus I am working on my Master's Degree and my wife is pregnant so I don't really have the time..


I'm getting quotes on #1 and #2 this evening..


I believe I have about $60-$70k in equity in the house but I am also interested in refinancing hopefully when rates hit rock bottom from all this COVID crap going on.


Any insight and advice is appreciated!


Thanks

Noooooooo!

HeLocs usually have a recall option on them and the bank can call it if they get jumpy.

Considering the financial situation in America right now, do NOT do this.


A dangerous situation - Ask Dave | DaveRamsey.com



Instead, buckle down for a bit, pay off some debt w/ the Ramsey debt snowball method and then save up cash.

 

[awful knawful]

My house was paid for. Rather than remortgage, we took out a line of credit.
Built my 30x40 garage that way. Bought a car, sled. Low interest rates, prime + 1?

Still have the line of credit, $50000, when/ if we need it.

 

[lilcoop03]

Why would you pay down on a house versus invest unless you have a crazy high interest rate. The S&P 500 has returned 9% over the last 30 years. My mortgage rate is 3.25%. Id take that 9% with compound interest any day.

Really? I thought it was closer to 6%... Would it be a safe assumption that my 401k could return 9% or more over the next 30 years?

It just so happens that I have 27-30 more years to work before retirement.. LoL

 

[lilcoop03]

Noooooooo!

HeLocs usually have a recall option on them and the bank can call it if they get jumpy.

Considering the financial situation in America right now, do NOT do this.


A dangerous situation - Ask Dave | DaveRamsey.com



Instead, buckle down for a bit, pay off some debt w/ the Ramsey debt snowball method and then save up cash.

Thanks. I think the plan is to sit tight for the moment with all the uncertainty and maybe take advantage of low rates for a refinance when the time is right. I do have until October or so to complete the remodel projects. I have cash reserves as well. Everything is paid for except my mortgage so I'm good..

 

[PhoenixM3]

Noooooooo!

HeLocs usually have a recall option on them and the bank can call it if they get jumpy.

Considering the financial situation in America right now, do NOT do this.


A dangerous situation - Ask Dave | DaveRamsey.com



Instead, buckle down for a bit, pay off some debt w/ the Ramsey debt snowball method and then save up cash.

Meh, payments are 1% of the balance of the HELOC itself. I’m using one on the house which we are selling.