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neadodsI've got tons of online stuff to catch up on, which is on the list of things for tonight. BUT - the reason I didn't get back online last night was because I got a 2.5-hour pitch for insulated siding. Thanks to the home show last weekend, I'm signed up for two more pitches this week alone.
The good: More insulation, which this house needs desperately. Also, no more need to worry about repainting, paint flaking, gutters rusting, etc.
The interesting: I can change the house color from barn red (which I've always been "meh" about) to something nicer. M's pumping for a navy blue with light blue trim.
The bad: $30,000.
And I have to ask myself: am I working so hard to get myself out of debt only to put myself back in by 30 grand? But on the *other* hand, I can likely get most/all of that funding out of a home equity loan, and it seems to me that it's not unreasonable for the house to pay for its own major renovations. It's not like I'd be blowing my equity oncrack and whores things that don't affect the livability/resale value of the house. And my mortgage payments have dropped; rolling an equity repayment into them would make for a not-too awful monthly increase, one that would hopefully be offset by lowering the high air conditioning bills and obscene oil bills (seriously, the last one was four figures) that I'm currently paying.
I don't know what that does to my credit rating and the long-term plan to fix the unsecured loan side of my life. Possibly nothing, as an HE loan is secured. OTOH, I *may* be able to squeak along until Discover is paid/replaced and then deal with the siding; the estimate is good for a year.
And I have to do SOMETHING about the peeling paint on the house; so I'm in for around $4,000 of repairs/repainting/general exterior work regardless. Although presumably I could ask the painter to use navy blue, now that I'm thinking about changing the color.
So: fellow homeowners. What would you do/have you done? Have you taken a home equity loan and was it worth it? What did that do your overall credit rating, do you know? Have you gotten siding and was it worth it?
The good: More insulation, which this house needs desperately. Also, no more need to worry about repainting, paint flaking, gutters rusting, etc.
The interesting: I can change the house color from barn red (which I've always been "meh" about) to something nicer. M's pumping for a navy blue with light blue trim.
The bad: $30,000.
And I have to ask myself: am I working so hard to get myself out of debt only to put myself back in by 30 grand? But on the *other* hand, I can likely get most/all of that funding out of a home equity loan, and it seems to me that it's not unreasonable for the house to pay for its own major renovations. It's not like I'd be blowing my equity on
I don't know what that does to my credit rating and the long-term plan to fix the unsecured loan side of my life. Possibly nothing, as an HE loan is secured. OTOH, I *may* be able to squeak along until Discover is paid/replaced and then deal with the siding; the estimate is good for a year.
And I have to do SOMETHING about the peeling paint on the house; so I'm in for around $4,000 of repairs/repainting/general exterior work regardless. Although presumably I could ask the painter to use navy blue, now that I'm thinking about changing the color.
So: fellow homeowners. What would you do/have you done? Have you taken a home equity loan and was it worth it? What did that do your overall credit rating, do you know? Have you gotten siding and was it worth it?
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no subject
Date: 2012-02-08 05:52 pm (UTC)How much overall debt do you have? Is it just Discover? This includes car loans and student loans.
How much savings do you have for emergency purposes, and how much retirement?
How much equity do you have in the house? How much is it worth? Is it underwater?
And do you plan to stay in this house for the next 5-10 years?
If you don't want to answer those questions, I'll say this:
If you're making good retirement donations, have no debt other than Discover which would be paid off within the year, have an emergency savings fund of at least 6x your monthly expenses, and have more than 50k in equity in your house, AND you expect to stay in this house for the foreseeable future, then yes, do the loan.
If not, you're right, you ARE adding to your personal debt and probably NOT in a way that will pay for itself, and probably shouldn't do it.
*hug*
no subject
Date: 2012-02-08 10:04 pm (UTC)no subject
Date: 2012-02-08 10:24 pm (UTC)I didn't see the part about "what will this do to my credit rating", so I'll answer that. As long as you pay all your debts on time, what mostly affects your credit rating is how much you owe compared to how much credit you have. That is,
I owe 3,000 but have credit of 40,000 (combined credit cards and HELOC limits) = good credit rating.
I owe 3,000 but have credit of 5,000 (combined credit cards and HELOC limits) = bad credit rating.
It's HOW MUCH of your available credit you've used that makes the biggest difference.
In general, you don't want to add debt to something like your HOUSE that you need to live in unless you really can afford it. If something happens and you can't pay that debt, they take your HOUSE. Much worse than just getting a bad credit rating if you default on some credit cards.
Hope that helps - srsly, send me an LJ message if you want to chew it over some more.
no subject
Date: 2012-02-09 12:34 am (UTC)*Retirement issues are a whole different discussion. People I know who worked all their lives and invested and planned still got shafted sideways due to the economy. Frankly, my retirement plan is "I don't."
This has given me a lot to chew on. Thank you.
no subject
Date: 2012-02-08 06:18 pm (UTC)no subject
Date: 2012-02-09 12:35 am (UTC)no subject
Date: 2012-02-09 02:51 am (UTC)You have to add together the first mortgage and the second mortgage to see if the total cost exceeds what the house is actually worth (in fact, your lender will not give you a home equity loan which, when added to your existing mortgage, exceeds 80% or so of the value of the house, which may be less than you think it is).
If you fall behind on payments for the HE, it's exactly the same as if you fell behind on your mortgage payments, and you run the risk of foreclosure. As long as you keep up those payments, then it should not have a negative effect on your credit rating--except that you are assuming a boatload more of debt to pay off. Your credit rating doesn't generally reflect mortgage payments until you start missing them. Miss one, or have a foreclosure, and you are toast.
In my case, the HELOC effectively doubled (or a bit more!) my indebtedness. I used the money to pay for fencing and a nice barn, which increased the value of my property... until the market collapsed. The value now, with improvements, is just about what I paid for the place in late 1999. Maybe a little more, but not a lot.--
I am fanatic about paying down both the first mortgage and the HE loan. A HE line of credit is insidious; it feels like free money, and it isn't. IF you have a LOT of equity--real equity--in your house, it might be the right thing to do, as long as you limit it to a manageable percent of that equity. If you don't, don't even consider it.
YMMV.
--I also would shop around and see if I could get a better price on that siding (if I stay in this house, siding is something I'll need to be looking at, too).
no subject
Date: 2012-02-09 03:03 pm (UTC)This year is supposed to be for getting further out of debt, not further in. I guess it's paint after all. (I've got an estimate for that too, and a list of people to start calling in April.)
TBH, when I'm out of debt, if I start setting aside the $$ I've put into old credit card payments (and I consider myself "out of debt" when the cards are wrangled, despite house and every decade or so, car) - anyway, if I put into savings what I've been putting into payments? I'll be able to buy siding outright after a few years... which would be right around the time that a paint job done this year would be wearing out again.
no subject
Date: 2012-02-09 04:02 pm (UTC)And I know what you mean about the cards. Particularly now, when so many of their interest rates are tied to the prime rate. As soon as the Fed loosens up on that, interest on credit cards is going to hit the roof. I need to be even more fanatic about paying those down than paying the house off.
no subject
Date: 2012-02-09 04:45 pm (UTC)YES YOU DO. It was a huge eyeopener a few years ago when I went to buy the car and replace Discover and find out that no bank or credit union wanted to help me do either because of the unsecured loans (i.e., credit cards.) They didn't give a rat's ass about the high 5 figures I owed on the house or my good credit rating, but they cared very VERY much about the middle 5 figures I owed on the cards
It took several rejections before I could even get a credit union to tell me what the magic number for rattling loose help with the unsecured debt was (which is why I talk about a gap between paying Discover off and replacing it. Paying off Discover, replacing Discover, and being out of unsecured debt are three very different targets, which I'm going to reach in different *years*.)
In the meantime, the house ticks along. The interest rate won't change, I've got half a month to make the window to pay the bill*, and the bank figures that because there's security, they don't need to fuss.
*One of Discover's tricks is to give me only about a week-long window to pay the damned thing and have it actually *count towards the monthly payment.* Pay 'em a week before the deadline, it's put to the monthly bill and counted as paid. Pay them again the week after the deadline, and it's put to my overall account... but is not credited as paying the next month's bill. And yes, they have tried to penalize me for "nonpayment" even after I gave them a massive payment (too) early in the month.
no subject
Date: 2012-02-09 05:27 pm (UTC)I had a card, got it paid off, tried to cancel it. Got one of those "customer service" folks who ignored my request and kept on and on and ON about "So you want to increase your credit limit" and variations on that theme until I was literally SCREAMING at him in frustration. I swore I would never, ever have another Discover card.
Both of my "working" credit cards (my credit union and USAA) cards do the same thing as your Discover card--payments made the week after the deadline will reduce the account but not go towards the next month's bill. I think this is because they don't know, at that point, how much the next month's bill IS. And actually, you are better off simply reducing the amount, because if your second payment DID go towards the next month's bill, a big chunk of it would go towards interest, not principal. This way, that second payment is all on the principal, which pays down the account faster.
no subject
Date: 2012-02-09 06:45 pm (UTC)actually, you are better off simply reducing the amount
Back when I was paid once a month (and Discover, natch, refused to move my pay them date to the "get paid" day), I'd put something nominal down to "pay" the bill, and then on payday put a huge wad down on the principal.
Now my pay dates have been moved... and frankly, I look forward to paying off the last of the balance next month. I'm assuming there's going to be some nominal "gotcha!" bill the month after for "interest" or "we added this paid feature to your account when you weren't looking" but then I should be quit of them.
They added payment insurance at a staggering fee to my account, claimed I'd asked for it, and refused to refund it, and kept charging it for three months after I'd complained the first time. There is not one dirty trick Discover hasn't played on me to keep me in debt, and I can practically hear them piddling themselves as they realize that I'm digging back out.
Anyway, I can't cancel them until I hit the magic number to open up another unsecured credit line; I want a second credit union card for emergencies before I tell Discover to take a long walk off a short pier. But when I do, it's going to be via certified mail and a follow-up phone call.
no subject
Date: 2012-02-09 06:51 pm (UTC)God bless credit unions. I swear by mine.
no subject
Date: 2012-02-09 07:58 pm (UTC)When I call - to be followed up with a certified letter - I'm going to be on a script as much as they are. Either "That is not pertinent to my decision to close my account/I can calling solely to discuss this account" (for attempted discussions about the other contents of my wallet, credit ratings, etc) or "No offer will prevent me from closing my account" (when they try to talk me out of it.)
And then the day after, via certified mail, "Pursuant to my discussion with [Name] at [time] on [date], account ### is hereby closed, effective immediately. No further fees or charges will be honored hereafter. Futher, you are hereby instructed that I do not wish to be contacted by you regarding this irrevocable cancellation of service."
I closed Chase without replacing it, but this will require more finesse - it's a larger chunk of my rating because, of course, as soon as they realized I was slipping through their grasp, they started frantically raising my credit limits in the hopes of ensnaring me again.
Chase was just as bad a shitweasel as Discover was - if you've got a Chase card you're not using, look into replacing it with a credit union card.
no subject
Date: 2012-02-09 09:08 pm (UTC)I would suggest not doing this, because they will not listen. Your script would be good for rational people, but they are not going to get into a conversation with you. That was my mistake. You could be saying "LA LA LA LA LA LA LA LA LA" and their "response" would be exactly the same. They're not trying to talk you out of it--they're trying to exhaust you until you give up and agree (which you're not going to do!)
I am keeping the Chase card and filing it deep away--a safety deposit box is always good. That way you don't use it, forget you have it, but you still have the credit, which boosts the credit rating.
no subject
Date: 2012-02-09 10:40 pm (UTC)no subject
Date: 2012-02-09 05:47 am (UTC)On the relative triviality of color, I *like* the barn red. It's different but classy. And I really hate blue, navy blue & light blue worst of all, but I realize I'm in a very tiny minority on that.
no subject
Date: 2012-02-09 12:31 pm (UTC)no subject
Date: 2012-02-09 03:04 pm (UTC)no subject
Date: 2012-02-09 03:04 pm (UTC)no subject
Date: 2012-02-09 09:52 pm (UTC)no subject
Date: 2012-02-09 06:45 am (UTC)Also, a coworker got a HE loan a couple of months ago - he was shocked at how *little* they would loan these days (as percentage of equity), compared to the last house he had 5-10 years ago.
no subject
Date: 2012-02-09 03:07 pm (UTC)no subject
Date: 2012-02-09 11:25 pm (UTC)