Help me explain this to my husband

[Anonymous]

We have a $900k home that we own outright (family inheritance). DH makes $130k a year and I'm at home, which is doable because we don't have a mortgage.

I would like to do @ $100k of renovations to our home. Since DH has never had a mortgage, he is worried about taking a HEL or HELOC. It'll take us 10 years to save up $100k and life is too short.

Is there a simple way to explain this logically to him? Don't most people take out loans to do home improvements? Since we have 100% equity, it seems like a no brainer to me but he's nervous.

[Anonymous]

Why not start smaller, with an amount your DH is more comfortable with? Do 25k of renovations, pay it off in 2.5 years, and take out another LOC.

Neither of you is crazy in this situation, so you should try and find a middle ground.

[Anonymous]

Agree that you two should compromise. I'm sure not all of the improvements need to be done ASAP.

[Anonymous]

Maybe point out that this would be like a person who makes 130K having a 100K mortgage. This seems like a reasonable mortgage for this income (you could find out what you would qualify for from a traditional bank to show him that this is within the realm of normal for a first mortgage.) It is actually cheaper to do renovations all at once, so I don't think it makes sense to start with only part if you can easily afford to do things at once, which you can.

[Anonymous]

Can you compromise, saving up a portion of it? Choosing a few projects instead of the whole thing at once? Make a spreadsheet and run numbers to see what monthly payments would be and where that would come from in your budget?

[Anonymous]

I wouldn't use a loan to fund renovations. Team husband.

[Anonymous]

Obvious solution. Get. A. Job.

[Anonymous]

Figure out what the monthly payments would be and go from there.

[Anonymous]

My parents own their house outright and have for ~15 years. They have an HEL with their local bank and have always used it for cars (they buy used) rather than taking out car loans. I don't see a problem with it. Make sure you get a good rate.

[Anonymous]

Your reasoning is off, OP. you should not be thinking about this in terms of equity in your home, since most likely having to sell your home or have your home foreclosed on to get the equity out to pay off the loan would be a complete disaster for your family, right? Your home is collateral for a loan you would be paying out of your family's existing income. Your home is NOT a source of income. So what you need to do is figuring out if there is room in your current budget to make payments on that $100,000 loan every month. At 130k HHI if you guys are trying to save for retirement, college, have car payments, etc, there may in fact not be that much extra in your monthly budget. And don't forget that you have to budget for normal home maitainence too!

It's reasonable to put some money in the house for upgrades if they are really going to make a big difference. But 100k is a lot!

[Anonymous]

Anonymous wrote:My parents own their house outright and have for ~15 years. They have an HEL with their local bank and have always used it for cars (they buy used) rather than taking out car loans. I don't see a problem with it. Make sure you get a good rate.

This isn't very smart. They have made their house collateral for a car loan. Silly silly.

[Anonymous]

I'm with your husband, unless the renovations are for health and safety. If it's "I want a new kitchen" then I'd increase family income (pick up a part time job, sell belongings we have but don't need), increase savings and specifically earmark those savings for the house fund (cut back on dinners out, jog in the neighborhood and cut the gym membership), or simply wait until our normal saving pattern allowed us to afford it.

I would rather wait 5 years or even 10 years to get my new kitchen than put my house at risk in case of job loss.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My parents own their house outright and have for ~15 years. They have an HEL with their local bank and have always used it for cars (they buy used) rather than taking out car loans. I don't see a problem with it. Make sure you get a good rate.

This isn't very smart. They have made their house collateral for a car loan. Silly silly.

I know, right? Why would a bank even allow this?

[Anonymous]

Why don't you just try being happy in the home you're in? Owning a $900K home free and clear is so awesome I am completely unable to sympathize with any complaints about it "needing renovation".

If his attitude is "let's do it a little at a time out of disposable income" -- then he is RIGHT and very sensible. Be happy you are married to a prudent man!

[Anonymous]

I will say it! He brings in the income, it's his decision.