If you could pay it off in 2-3 years why not just save up cash? If you have any savings or taxable investments then you would be borrowing at an after tax rate of return of 8% which beats any of your investments.We obtained a $100k HELOC in 2022 to pay for $28k solar panels. Rates at that time were @ 2.5 - 3%. We paid that off easily by the end of last year. Panels will pay for themselves within 3 years. My question is, now that rates are at 8%, am I being naive or overly extravagant with again tapping into the HELOC for $35k of (landscaping, pool, basement finishing and heat) costs? On one hand, these costs are exactly why we obtained the HELOC. The landscaping and finishing the basement will add to our home value. Pool and pool heater will not.
We are financially stable otherwise, with a pension, 403b, His/Her Roths and we will have way more than enough to retire. On the other hand, 8% is a lot. And not paying cash just feels a bit selfish to me. We are early 40s, both have very stable careers with a total HHI of > $150k with only other debt being the mortgage of $170k @ 2.35%, 11 years remaining.
Minimum payment on the HELOC is $100. I plan to start with $500 and increase from there. Potentially paying this off within 2-3 years.
Appreciate any thoughts.
Statistics: Posted by Nate79 — Fri Apr 19, 2024 6:15 am — Replies 7 — Views 532