Best way to finance a home improvement project?
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Anonymous
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DH and I are in our early 40's. We have about 500K in investments (401Ks, savings and IRAs) and about 120K in home equity, both have excellent credit scores. I have been a SAHM for eight years, but am now returning to work.
We want to add a home addition that will cost approximately 100K. We would like to do this as soon as possible. How should we finance this - home equity loan or pulling cash from investments/savings? |
Anonymous
| You probably won't be able to borrow 100k on a home equity loan if you have only 120k in equity. |
Anonymous
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How much can you typically borrow with a HE loan? I assume it's a percentage?
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Anonymous
| It depends on the lender. Most big banks require you to maintain 20% equity. A lender that allows 95% or sometimes even 100% LTV means that you need to maintain only 5% or 0% equity (combination of both loans). |
Anonymous
| Are you only thinking of an equity loan or pulling out of investments or are you open to other forms of financing (traditional, personal/construction loan that gets wrapped into a refinance)? |
Anonymous
| OP here. We would consider all options right now. We refinanced a couple of years ago, our rate is 3.75 and we have a 20-year loan. |