How To Finance Home Repairs
REM #A700
By Ilyce R. Glink
Summary: A reader is having repairs made to her home costing a large amount of money. Ilyce helps this reader make decisions about how to best pay for the work.
Q: We’re having much needed repairs done to our house, and it will cost
about $10,000.
Although we could pay for this in cash, we were saving the cash for private
school tuition for our two children and for emergencies. We have been told that
taking out a home equity loan (HEL) or home equity line of credit (HELOC) are
two good options. What do you think?
A: I don't believe you should use up every spare bit of cash you have for emergencies,
but if you do have cash that's sitting around earning 1 percent interest, why
would you borrow against your home and pay 7 to 8 percent interest?
The smart thing to do would be to use the cash you have to make the repairs,
but get a home equity line of credit for your house. You shouldn't pay anything
(or very little) to open up a HELOC, and that will give you the comfort that
you'll have a back-up plan just in case something else goes wrong and you need
a fast infusion of cash.
Once you make these repairs to your home, then you can start saving again for
tuition and other emergencies. Until you need the money, you will be saving
the difference between what you would earn by having the money invested and
the interest rate on the loan.
NOTE: This column is distributed by Real Estate Matters Syndicate, PO Box 366, Glencoe, Illinois, 60022. This column may not be resold, reprinted, resyndicated or redistributed without written permission from the publisher.
Quit-Claim Deed Question
Quit Claim Deed Transfers Property Taxes
Deed in Lieu of Foreclosure Will Hurt Credit Rating
Selecting an Adjustable Rate Mortgage
Use Caution When Offering Seller Financing
Link to This Article
Like what you've read? Spread the word! You can link to this article
from your website by copying the following code and adding it to
a page on your website:
Copyright ©2001-2007. ThinkGlink, Inc.
All rights reserved. Reproduction of material from any www.ThinkGlink.com pages without permission is strictly prohibited.
Site designed by Walker Sands Communications
