Need Some Advice - Best Way To Tap Into Home Equity?

Submitted by JumpinJammiez t3_11elb5d in personalfinance

We have come into a situation where we need some semi-major repairs done to our pool, and we also need some other things like new HVAC, couple trees removed, new appliances, etc.

I currently have a 30-year-fixed VA loan financed at 2.625%

Home value is roughly $625k

We owe $475k on the loan

I have been looking into options and it seems like a HELOC might be our best bet? I obviously don't want to refinance the entire loan with current interest rates given how low the original is.

I was hoping to get some advice from you finance guru's here.

Financing through the pool company is not an option because the interest rate is pretty ridiculous and for a short term that would be a pretty hefty payment. The HVAC I have considered financing though the HVAC company, though. They currently have 0% for 5 years and the new system would be in the $10-12k ballpark.

Any advice is appreciated. Thanks!

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[deleted] t1_jaeomwd wrote

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JumpinJammiez OP t1_jaerjjs wrote

Thanks.

Well, I'm 33 years old with 4 kids on a single income. A "beefy" emergency fund isn't really in the cards for the foreseeable future.

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[deleted] t1_jaerpp8 wrote

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JumpinJammiez OP t1_jaetbum wrote

I'm not sure that's really an option either with current rates. Our $510k mortgage has a payment of $2500 including tax/insurance.

Even if we downsized to a $300k house at current rates (7%ish), the loan calculator says our payment would be somewhere in the ballpark of $2300. A $200 difference.

Even if it were $500/mo difference, it still doesn't seem worth giving up our property (which we love) for $500/mo considering we'd be getting into something worth $300-350k and getting of something worth $625k.

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dad_husband_selfi t1_jaequj2 wrote

0% sounds pretty good to me!

Yes, a HELOC or HELOAN would be the way to go. Don't touch the first!

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ReddSaidFredd t1_jaeojtu wrote

Is saving up and paying cash for the pool an option? It's not as if it is a necessity, like an HVAC system.

How much debt do you currently have, besides the house?

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JumpinJammiez OP t1_jaesfyx wrote

Probably not. The repairs are likely going to be in the $8-10k range. It needs to be re-surfaced because it is leaking, and I don't know what type of other larger issue that may cause in the future if I sit on it. Another $2k or so for the trees to be removed which are close to the pool plumbing.

Besides the house we have:

2 car loans ($50k combined)

CC Debt ($3k)

We also owe the IRS about $2k this year.

So around $55k total debt outside of the home loan.

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ReddSaidFredd t1_jaetkxc wrote

You have an unhealthy relationship with debt. Borrowing money to fix a luxury item when you owe money to the IRS is not a good look.

You are the current normal American - $500k house, two new cars in the driveway, and can’t afford to pay for the basic upkeep of your home.

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JumpinJammiez OP t1_jaewdw7 wrote

Well, the median home price in my city is $529k. In my immediate area, in a less expensive neighborhood, I could get a smaller house for 400-425k. At current rates over 3x what mine is, it'd still be more expensive, considerably.

Even if we rented, I'd still be paying $2500 or more.

The cars are 2019 and 2017. Where you can get 2 new cars for 25k each (one of which that fits 6 people) is beyond me.

Having $3k CC debt is less than 1/2 the American average.

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ReddSaidFredd t1_jaezrhc wrote

Like I said, a current normal American family. Adding consumer debt onto your pile of consumer debt so you can work until you are 70 since you will always be in debt.

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JumpinJammiez OP t1_jaf06fx wrote

So what does the average American with average credit do when their family requires 2 cars and a home in the current economy? I see you've got it figured out so please do tell.

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CAicefishing t1_jaev4zy wrote

A 0% HELOC can be like free shipping; they just up the product price to pay for it. Make sure the quote is competitive.

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