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We own our home free and clear. We need some major repairs on it. Costs will be somewhere around $50-70,000.
All our money is in Fidelity and invested. We have around $100,000 cash in Fidelity Money Market.
Our checking is with Chase. When I went to Chase to get some paperwork notarized, she brought up the reason why we were planning to pay cash for the various repairs instead of taking out a home equity loan?
Husband is 86, I'm 70. We've been drawing RMD's for many years. No pension, or annuities. Our invested money is about 1M.
I hate using the money invested but we have to have these repairs done on the house. I'm tempted by the Line of credit which we've had in the past when we worked. Being retired scares me to take on a loan plus a lien on the house.
Last year we made about 10% on our investments. If we took out a line of credit the interest would be around 5%.
What would be the best financial decision in a case like ours?
the best decision is the one YOU are most comfortable with , not us.. if it were me i would pay cash but only because relative to assets it is a smaller amount ...we have had daily swings in investments that much which is why we paid cash for a new car last year . .
Husband is 86, I'm 70. We own our home free and clear.
We need some major repairs on it. Costs will be somewhere around $50-70,000.
Think long and hard about whether it's time to sell (even "as is) and to downsize/relocate.
Chief among these considerations is the FMV of the property vs your entire net worth.
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What would be the best financial decision in a case like ours?
Aside from the sell options?
A responsible use of a reverse mortgage might work out okay for you.
Personally, I would take out the loan.
Our situation is similar to yours in that we're retired with the house and all the 'stuff' paid for. We also have adequate cash flow to provide for our life style, and that's important.
So, IF I felt that I could make payments without too much difficulty, then that's what I would do. Don't forget; the money spent on the house is being used to improve the house and its value. So it's not like you are borrowing money for a car or a vacation that will be worth nothing. AND you can always go to your invested money and pay the loan off early.
I agree with sell and buy a less expensive, newer place. My main concern would be being forced to sell several years from now, when a move will be physically much harder on you than it is now.
We own our home free and clear. We need some major repairs on it. Costs will be somewhere around $50-70,000.
All our money is in Fidelity and invested. We have around $100,000 cash in Fidelity Money Market.
Our checking is with Chase. When I went to Chase to get some paperwork notarized, she brought up the reason why we were planning to pay cash for the various repairs instead of taking out a home equity loan?
Husband is 86, I'm 70. We've been drawing RMD's for many years. No pension, or annuities. Our invested money is about 1M.
I hate using the money invested but we have to have these repairs done on the house. I'm tempted by the Line of credit which we've had in the past when we worked. Being retired scares me to take on a loan plus a lien on the house.
Last year we made about 10% on our investments. If we took out a line of credit the interest would be around 5%.
What would be the best financial decision in a case like ours?
Thanks...
We are 69 and 70, and just took out a HELOC. We decided it made more sense to use the equity in our house, in case of an expensive emergency, than to draw money from investments. We have no immediate plans to use it, but it’s there if we need it. Our thinking is, let the house pay for what it needs, and the investments pay more than the interest on the HELOC (5%).
Funny, but a few weeks after we took it out, we had to replace the HVAC. The heating company had same as cash financing, so we are using that, but if not, we would have used the equity line.
OP, you can always use some interest from your investments to pay off your loan, so it’s almost like it’s “free”.
I am 64 and have not filed for Social Security yet. I took out a $100K HELC at 5%. I am using it until I get my social security, and then I will pay it back out of my IRA account.
Read the fine print on that HELOC. A HELOC is definitely not the same as having a mortgage. Usually the duration is much less, the rates are higher and there may be other limitations.
"You gotta know when to hold 'em, know when to fold 'em, know when to walk away, know when to run..."
Less hassle to sell and move somewhere else, newer, appropriately sized to current lifestyle and needs than deal with construction and living with the mess to upgrade a house when in one's 70's and 80's.
Think long and hard about whether it's time to sell (even "as is) and to downsize/relocate.
Chief among these considerations is the FMV of the property vs your entire net worth.
Aside from the sell options?
A responsible use of a reverse mortgage might work out okay for you.
Don't like the idea of a reverse mortgage. Fees are too high.
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