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[quote=Anonymous][quote=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![/quote]

At 130k HHI, if there isn't room in OP's budget to make payments on a $100k mortgage, then they need to re-assess their budget.  they don't have daycare expenses because OP stays home.  If they don't have student loans and/or private school tuition to pay for, then I would assume the biggest possible expenses are, saving for retirement, and college savings.

I'm not entirely sure if a HEL HELOC is the best avenue.  Maybe taking out a 15 year 100k mortgage on the house would make more sense.  Rates are low, and they could deduct the interest on their taxes.  They'd also be able to pay it down sooner if they wanted by applying extra to principal every month.

I had a $165k loan at 5.5 percent when I made $50k.  I also had a car payment and saved toward retirement.

I agree that the issue isn't how much equity they have in the house, but rather, they need to look at their budget and expenses.  But there is no reason why they shouldn't be able to budget for that amount.  They might have to scale down on other things -- like vacations, et cetera.

I'm curious what the renovations are.  I wonder if they are frivolous renovations.  In that case, if I were OP's husband, I wouldn't go for it.  But if they are necessary renovations (i.e. things that will improve insulation, energy efficiency, et cetera, better use of space) or if the house is really outdated (i.e. kitchen and bathrooms from the 60s or 70s), then I think it makes sense to spend money on renovating.

One word of caution to OP, renovations always ended up costing more than the original projection, ALWAYS.  So if you are getting estimates for 100k, I would at least budget for 125k (if not leave a little room for even more than that). Often it isn't until a renovation begins that contractors realize the full extent of what needs to be done, especially for older houses.[/quote]

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