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Old 11-03-2011, 06:32 AM
 
Location: Manassas, VA
1,559 posts, read 3,187,118 times
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Ok - here is the deal. Hubby and I are in the process of having a house built. We are planning on having it to the point of being dried in and then finishing the rest over the next couple of years as cash comes in so that we do not have a mortgage. We are trying to make this house very energy efficient but that obviously costs more $$. Now hubby can draw from his TSP after 59 1/2 (if I'm correct and I have to double verify this) without penalty. He doesn't have a ton in his TSP, just under a few hundred k. He will have a pension of about 45K and I will continue working. Would you or would you not tap into that tsp just a bit to make the home super energy efficient and fully complete the dry in....or would you find another way. We already have a HELOC on our first home (which will be paid off when we sell it - plus that will give us more $$). We live in a good neighborhood where homes are only taking a week or two to go under contract so hopefully it will stay that way.

What are your thoughts? I posted this in the real estate thread....but maybe it is more appropriate to this forum....unless there is another more appropriate forum, lol!
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Old 11-03-2011, 07:25 AM
 
Location: Franklin Lakes, NJ
174 posts, read 393,734 times
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Interesting question for these times. I'd dip to buy the home because I feel that having a hard asset is better in the days to come than sitting in the TSP. I wouldn't tap it for renovations though because I don't know how it will retain value in the next couple of years. The TSP has great rates and maybe you should take a loan?
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Old 11-03-2011, 07:48 AM
 
Location: The Triad (NC)
28,537 posts, read 62,253,689 times
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You haven't quantified the amount you would need (to borrow or whatever)...
but unless it's crazy high* I'm gonna say no. Don't borrow.

If you have what it takes to do the finishing work (and everything else you do around there)...
then you're able to work for pay too. Find a way to earn that money.

hth


* and if it is crazy high...
then I've been reading someone else posting under your name for a year.
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Old 11-03-2011, 08:11 AM
 
Location: Manassas, VA
1,559 posts, read 3,187,118 times
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LOL. Bottom line is that DH will be retiring, I won't. However, in building the house - we need liquid cash.... We can't get everything from our home of course and some things just won't wait. So, we either skimp on things such as a roof (which I don't want to do but....) or we find some extra cash somewhere.

I'll still be working full time. DH had a heart attack and quad bypass so he won't be working full time if he's working. One of the issues is that we are here in the DC area and the home is in Vermont....so it's not like we can work on it afar.

Of course, we hope to have all the cash....but I don't know that we will until our house is actually sold and that's not going to happen until we are living in the other one.

I was thinking about borrowing 60K. That's a lot. We'd take a loan....but DH may be separated from the agency before we can pay it back....so, it would be considered a withdrawal....

Thinking....thinking....
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Old 11-03-2011, 08:29 AM
 
Location: The Triad (NC)
28,537 posts, read 62,253,689 times
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Quote:
Originally Posted by vermonter16 View Post
Of course, we hope to have all the cash....but I don't know that we will until our house is actually sold and that's not going to happen until we are living in the other one... I was thinking about borrowing 60K.
In for a penny.
Can you go back to your lender to increase the HELOC?
The sooner you can get the other place done...

---
(btw in my earlier post I confused you with forestbeekeeper)
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Old 11-03-2011, 08:53 AM
 
Location: Manassas, VA
1,559 posts, read 3,187,118 times
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No problem. I like Forestbeekeeper . That's funny about the HELOC because I just applied for the HELOC.... Unfortunately, the house didn't appraise where I thought it should have been (neighbor had hers appraised for more and other neighbor just sold theirs for a higher value) and mine is larger. Be that is it may - my point, nope, they won't give me any more equity.

Not sure what taking a loan against our land would entail....the only thing is, I didn't want a lot of loans...
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Old 11-03-2011, 12:03 PM
 
Location: Mtns of Waynesville,NC & Nokomis, FL
4,243 posts, read 8,092,981 times
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My 50Cts...
A couple of thoughts that may relate to your decision making:
-'hard assets' such as RE, are not very liquid these days/years and maybe not anytime soon. Having dough tied up in the new/maybe not completed for a year or two house, and esp dough that came via a loan, would not be my choice. You will need some real cash flow to get to step 1 or 2 on that not yet dried in house, and after it is dried in.

-If your husband taps into his TSP, (I wiki'd it, but am no expert, lol!), those withdrawals may be taxable, (like IRA withdrawals are), and regardless, it diminishes his TSP balance considerably, and 'early', over the next couple years.

I really don't have a up or poz suggestion. I wish you luck on the 'geographically remote' build; we did one in NC from NY, and it was an experience I will never repeat. Add in the CW that dried in, not completed houses seem to take a lot longer to finish than a contracted or on site GC'd house, in my experience. Wish I had a magic solution or great opin for you.
GL, mD
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Old 11-03-2011, 03:06 PM
 
Location: Sequim, WA
786 posts, read 1,908,458 times
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Vermonter...it's difficult to answer your question without more info. I would recommend reading through the publications listed at this link:

https://www.tsp.gov/forms/formsPubs.shtml

But...my only other comment is that unless you are certainly your husband's TSP is all going to be "icing on the cake" after retirement and you will get along just fine on pensions and other resources, I would be very careful about using the TSP money before retirement.
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Old 11-03-2011, 05:24 PM
 
Location: The Triad (NC)
28,537 posts, read 62,253,689 times
Reputation: 32267
Quote:
Originally Posted by vermonter16 View Post
Not sure what taking a loan against our land would entail...
That is the traditional approach to getting a construction loan.
You may still have DTI issues though.

Quote:
Unfortunately, the house didn't appraise...
Then you may need to move up the sell date on the VA home
and rent a small apartment for the time needed.
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Old 11-04-2011, 06:14 AM
 
Location: Manassas, VA
1,559 posts, read 3,187,118 times
Reputation: 839
Yeah, I've thought about renting but we have cats and generally people don't like renting to people with pets. As for the pension being 'icing on the cake' - well, we have lived on a lot less! He'll still have a TSP and we'll look into the loan thing but I know that once you separate from the agency that loan needs to be paid back immediately or it is considered a withdrawal. We live in VA, the house is in VT.

I know that it goes against everything to touch savings....and we'll sit down and run the numbers. This wouldn't happen until sometime next year anyways - I'm just trying to look ahead at what we may be faced with. I think I'd rather lose some of his TSP rather than acquire a mortgage. I'd take money out of my 401K but I'm too young and would be penalized and that doesn't help the situation either. We've got more than enough assets, it's just choosing what and what not to tap. We could, more than likely pay back everything in the TSP over the course of a couple of years...but like I said - I don't know that a loan is valid after leaving. However (you've got me thinking). We could tap the money, and then put the money into a roth or something like that. We were going to let the TSP sit there for at least another 7-8 years or so....

Thanks for all the responses.
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