Anonymous wrote:We plan to embark on some renovations next year, with an estimated cost of just under $100k. We have an unused HELOC for $150k. We are also expecting the proceeds from a sale of another property within the next month which will likely be enough, or almost enough to pay for the work in cash.

HELOC rate is currently under 3 percent but adjustable.

Do we borrow money from the HELOC at a low interest rate and invest the approx 100k the we're expecting to get?

Anonymous wrote:OP you don't need a calculator-- if you are comparing investing in a taxable account against paying off a tax deductible debt, then the tax issue washes out (reduces both your income and the cost of borrowing) so if you just want to know how much you have to earn to make it worthwhile to carry the HELOC, the answer is whatever the interest rate is on the HELOC.

Anonymous wrote:do not do it all on your HELOC as it will affect your credit score in case you want to do something (like refinance)

we are in a similar situation - with excellent credit - a decent amount of our home paid off - and we have a HELOC that we used for a major renovation.

earlier this year we refinanced with the rates so low and I was shocked to see my credit score. it was in the high 700s - but a year and a half ago when we got the heloc it was in the mid 800s. Our loan officer commented that by having the HELOC - and having so much of it used (we were at ~80K on a 100K LOC) it negatively impacted out scores - even though the LTV with the HELOC and mortgage was less than 80%.

now - it did not stop us from getting a great refi rate. but in oter situations, it may have.

Anonymous wrote:

Sigh. OP here again. Having a conversation here sometimes is like banging my head against a brick wall. If you saved for years how on earth can you not think it's a lot of money? I wasn't asking if we can afford it, and we certainly can. Here, lets see what you think: We have a net worth of over $1million. Our home is currently worth about $600k but we owe less than $400k. We have 15 years left on the mortgage but could pay off the entire amount tomorrow, cash. Apart from our (small by DC standards) mortgage we have NO other debt. Still, $100k IS A LOT OF MONEY!

I think my question seems to have been lost here. Among the drivel and people who think that $100k is pocket change, there is sometimes some pretty good advice here that can raise issues that might other wise have been overlooked. What I'm asking isn't whether we can afford it, but whether we are better off investing the cash and getting X rate of return (where X may be negative depending on how it is invested but may well beat out the cost of interest on the HELOC plus advantage of being tax deductible.) Does anyone have any thoughts on that matter? If not, I shall consult google and see if I can find a calculator or spreadsheet program that will help me work out what rate of return I'd need to get for it to make sense to borrow rather than spend.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:cash, that is not a lot of money and keep the heloc just in case you decide to do more renovations

Speak for yourself! For most people in the country -- myself included -- $100k is a LOT of money. Borrowing 100k will increase our TOTAL debt (all debt including mortgage) by 50 percent. It's also significantly more than our annual income. It's almost half what I paid for my entire house.

Even among some of the mega rich that seem to hang out here, $100k is a lot of money.

This is the OP by the way and I appreciate the suggestion of the other poster. We may take that approach.

I'm with the pp for the most part, you shouldn't do 100K renovations if you think it's a lot of cash. Michelle Singletary says the only thing you should use a HELOC for is emergency repairs, like a roof. Anything cosmetic is a want and you should pay cash for it. We just did 200K in renovations and put just under 50K on HELOC. We saved for years, have no other debt, and a 15 year mortage that is well less than half the home's value, fwiw.

Anonymous wrote:

Anonymous wrote:cash, that is not a lot of money and keep the heloc just in case you decide to do more renovations

Speak for yourself! For most people in the country -- myself included -- $100k is a LOT of money. Borrowing 100k will increase our TOTAL debt (all debt including mortgage) by 50 percent. It's also significantly more than our annual income. It's almost half what I paid for my entire house.

Even among some of the mega rich that seem to hang out here, $100k is a lot of money.

This is the OP by the way and I appreciate the suggestion of the other poster. We may take that approach.

Anonymous wrote:cash, that is not a lot of money and keep the heloc just in case you decide to do more renovations