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Started By
Message
Small Loan For Home Upgrade
Posted on 4/22/13 at 1:06 pm
Posted on 4/22/13 at 1:06 pm
As some of you remember from my last thread, I'm in a quandry of buying something we can't afford or adding a 2nd bathroom to our little house. We really need the extra space (expecting our first 
) and a family friend is working up a plan/estimate for us to add a walk in closet/bathroom to our bedroom. If we do this, we'll have no problem staying in this house for another 3-4 years. It has a great yard, privacy fence, updated interior, good part of town, etc.
Here's the dilemma:
We have enough in our savings to pay for this (assuming $10,000) but obviously don't want to drain it. What's some good options here? Home equity lines of credit? I've heard for those you have to have good credit score. I do have about $11,000 in equity and my wife has good credit but I bought the house before we were married. Can she get it?
) and a family friend is working up a plan/estimate for us to add a walk in closet/bathroom to our bedroom. If we do this, we'll have no problem staying in this house for another 3-4 years. It has a great yard, privacy fence, updated interior, good part of town, etc. Here's the dilemma:
We have enough in our savings to pay for this (assuming $10,000) but obviously don't want to drain it. What's some good options here? Home equity lines of credit? I've heard for those you have to have good credit score. I do have about $11,000 in equity and my wife has good credit but I bought the house before we were married. Can she get it?
3
Posted on 4/22/13 at 1:23 pm to LETSGEAUX2
I am not 100% positive about this, but I am sure a mortgage officer will come verify. I have not worked with HE loans or HELOCs in about 5 years, but...
I believe that HELOCs will not allow more than 80-90% LTV these days. So even if you have 11k equity in your house due to 80-90% LTV you will not have usable equity in terms of how banks do HELOCs now.
If you find a lender that will allow 100% then you should be able to put your wife on there (unless in Texas or a state with tougher laws), but you will have to be on there too.
If you cannot go 100% LTV on a HELOC then your best bet is a personal loan with a credit union. Neighbors is very good. I got a $7,500 personal loan from them about 6-8 months ago at a rate of 8.4% (best possible they offer). Many institutions do not offer personal loans any longer.
Another option is a credit card for 0% interest for an introductory period. Problem is the period is often only for 12-18 months.
Good luck!
I believe that HELOCs will not allow more than 80-90% LTV these days. So even if you have 11k equity in your house due to 80-90% LTV you will not have usable equity in terms of how banks do HELOCs now.
If you find a lender that will allow 100% then you should be able to put your wife on there (unless in Texas or a state with tougher laws), but you will have to be on there too.
If you cannot go 100% LTV on a HELOC then your best bet is a personal loan with a credit union. Neighbors is very good. I got a $7,500 personal loan from them about 6-8 months ago at a rate of 8.4% (best possible they offer). Many institutions do not offer personal loans any longer.
Another option is a credit card for 0% interest for an introductory period. Problem is the period is often only for 12-18 months.
Good luck!
Posted on 4/22/13 at 1:47 pm to LETSGEAUX2
I'm in the same boat as you except its a repair to the house (roof). I'm considering a loan against the wife's 401k and keeping the shortest term possible (one year). It's 4.25% and you are paying that interest back to yourself.
It sounds like you may not qualify for much money from a HELOC.
It sounds like you may not qualify for much money from a HELOC.
Posted on 4/22/13 at 2:54 pm to jmtigers
quote:
jmtigers
You are paying the interest back into the 401k, but you are paying it back with post tax dollars which will be taxed again upon withdrawl.
Posted on 4/22/13 at 3:37 pm to LETSGEAUX2
If you have a kid on the way (congrats) and have 10k in savings, 11k in equity, you need to use the bathroom you have for awhile. You are not in a position financially to do anything right now. One bathroom is fine with newborns easily for 4-5 years.
JM2C. But looking to pull from retirement for a bathroom you don't need is shortsighted
JM2C. But looking to pull from retirement for a bathroom you don't need is shortsighted
Posted on 4/22/13 at 3:46 pm to ItNeverRains
quote:
If you have a kid on the way (congrats) and have 10k in savings, 11k in equity, you need to use the bathroom you have for awhile. You are not in a position financially to do anything right now. One bathroom is fine with newborns easily for 4-5 years.
I tend to agree but if we could borrow the money, say from family, I don't think we'll lose the $10,000 when we go to sell the house. I think it will sell a lot easier and be easier on us while we're here. I've run the numbers like crazy.
Basically, we borrow the money and spend a year paying it back and 3 years saving for a 20% down payment on our dream home and sell it for $10,000 more than we would now OR don't do it and sell it for $10,000 less and still take 4 years saving for a down payment.
This post was edited on 4/22/13 at 3:48 pm
Posted on 4/22/13 at 4:58 pm to LETSGEAUX2
If you borrow money from family, insist on having an agreement drawn up and notarized.
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