HELOC or other options? Update 11/8

[Mushe]

We are close to contracting for solar for our house and pool, at an initial cost of about $27k. MH would prefer to just use cash on hand, but I see that as e-fund. I’m more conservative financially. We also use an eTrade account as a place to park mad money, which is what he sees as the e-fund, but when push comes to shove, he never wants to sell those stocks, even though we transferred money there at one point specifically as a holding spot for renovations. We paid cash for a pool last year that ate up about $20k more than we’d initially thought, so I’m feeling protective of building it back up.

Financing through the solar companies is junk; our salesperson even recommended not using it. I want to push through this year, as the tax credit will go from 30% to 26% next year.

If you’ve used a HELOC, do you have advice on where to find one? Lending 🌳? Your mortgage company? My dad just gave me his info so I can try USAA too, if they have good rates, but he uses a credit union himself. We would plan to pay it off at probably $500/mo so it’s short term financing.

If not a HELOC, would you say sell some of the stocks? Maybe a compromise of half cash, half stock?

Update 11/8: We decided to go with a HELOC, as BofA had an introductory offer of 3.49% for the first 12 months, and we’re supposed to get further discounts of .25% each for relationship and autopay. The process took what seemed like forever, especially given ads I’ve seen for online options that are immediate, but without need for an appraisal or anything we have access to $100k. We’ll only use maybe $20k, but it’s nice to know it’s there for the 10 year draw period, and we should be able to pay it off within the year. Solar is also super slow to approve design through us and now on to our HOA. I’m looking forward to be able to swim earlier in 2020, though!

[just]

What state are you in?? Some states run and subsidize solar loans, though, I'm sure you already looked into that.

[madisen]

What part of financing through the solar companies is considered junk? I've never looked into that.

If you do go with a HELOC, right now your best bets are banks or credit unions for the best terms.

Also, I've heard people going over budget on pools a lot. I'm considering one. Can you share round about what you initially expected, where it ended, and why it was so different? Did you add features or things you hadn't considered? etc.

[Mushe]

just we’re in California. I have a friend in WV who got a killer deal, but nothing I’ve found for us. The leasing companies are predatory around here, but then it’s harder to sell your home.

[Mushe]

madisen it’s all the extras that took us over. The pool itself was like $35, but there’s all this concrete, ended up needing a baby fence after a surprise pregnancy, landscaping, and now adding solar ($5k) because we found it was often cool except for the hottest days. We kind of cheaped out and did a lot of the landscaping ourselves, and now I wish I’d just paid our pool builder to do it. We were probably $55k all in. Eeeeek that hurts to write.

[just]

Oct 7, 2019 12:12:48 GMT -5 Mushe said:

just we’re in California. I have a friend in WV who got a killer deal, but nothing I’ve found for us. The leasing companies are predatory around here, but then it’s harder to sell your home.

That's unfortunate - We're in MA so got a 1.25% loan for our solar from a local bank that's subsidized by the state.

[madisen]

Ouch, yes, that is a huge % increase. However, if in the end it adds to the reasons you decided to get a pool in the first place (being able to use it and enjoy it) then it sounds worth it. Thank you for sharing that.

You're right about potential additional problems, from a mortgage guideline perspective, when selling if you go with a solar lease rather than a HELOC. I had forgotten about that. For not dealing or worrying about that alone, I'd recommend a HELOC or money from the trading account you mentioned. As to which, I don't have a recommendation on one of the other but some things to consider would be:

- Interest rate on the HELOC
- Tax implications for a HELOC vs selling investments
- What you think the market will do in the time frame it will take for you to pay back the HELOC

[Mushe]

Oct 7, 2019 12:27:17 GMT -5 just said:

Oct 7, 2019 12:12:48 GMT -5 Mushe said:

just we’re in California. I have a friend in WV who got a killer deal, but nothing I’ve found for us. The leasing companies are predatory around here, but then it’s harder to sell your home.

That's unfortunate - We're in MA so got a 1.25% loan for our solar from a local bank that's subsidized by the state.

That is awesome! We got quotes from multiple companies here, and there are fees associated with financing that were about $7k for a modest sized system like ours. 😳

[hamster]

We used our bank (which is not our mortgage holder).

4.75%, minimum payment is 1% of our balance.

[dr.girlfriend]

IDK all the details because we ended up just crossing our fingers and spending our savings down to a moderately-uncomfortable level, but when we were looking at a HELOC for our addition there was a credit union affiliated with my work that offered a no-fee HELOC -- so, no fees to open it and then you were only charged if you used the line of credit. We thought about doing that, and then if we DID need emergency money we could pull from the HELOC, but hopefully we would not need it.

[simpsongal]

I’d probably pay half cash and heloc the rest. I refied over $40k in SLs 2 yrs ago and at relatively low interest and $600/mo it feels like it’s take forever to pay down. If you’re good at rebuilding savings I bet you’ll be up there in no time.

[dr.girlfriend]

Oct 7, 2019 12:15:30 GMT -5 Mushe said:

madisen it’s all the extras that took us over. The pool itself was like $35, but there’s all this concrete, ended up needing a baby fence after a surprise pregnancy, landscaping, and now adding solar ($5k) because we found it was often cool except for the hottest days. We kind of cheaped out and did a lot of the landscaping ourselves, and now I wish I’d just paid our pool builder to do it. We were probably $55k all in. Eeeeek that hurts to write.

Busting in to say congrats on the surprise pregnancy -- I just saw your sig and it looks like it was hopefully a happy surprise!

[Mushe]

Oct 7, 2019 16:38:39 GMT -5 dr.girlfriend said:

Oct 7, 2019 12:15:30 GMT -5 Mushe said:

madisen it’s all the extras that took us over. The pool itself was like $35, but there’s all this concrete, ended up needing a baby fence after a surprise pregnancy, landscaping, and now adding solar ($5k) because we found it was often cool except for the hottest days. We kind of cheaped out and did a lot of the landscaping ourselves, and now I wish I’d just paid our pool builder to do it. We were probably $55k all in. Eeeeek that hurts to write.

Busting in to say congrats on the surprise pregnancy -- I just saw your sig and it looks like it was hopefully a happy surprise!

Thank you so much! Yes, very happy. 😄 she’s 1 now and we are so grateful.

[badgergrl]

We did a 401k loan to cover ours. We pulled the trigger within about 3 weeks of the election and had to scramble to get the money. We had it in cash but I would have left us a bit short of something else came up. But my husbands job is super super secure so it’s the cheapest way to access money short term.

[tealblue]

We opened a HELOC several years ago when starting renovations. We went through our local credit union- they had rates at prime (they are variable with prime). We had $0 fees if we withdrew $10k at closing.... we could repay the $10k the following week.

We use our pretty frequently as we’ve been in a constant state of home renovations. Our minimum monthly payment is 2% of our balance. Our HELOC is opened for 20 years which is nice. We could just have a $0 balance for years and years and no penalty or fees or if we have an urgent need, can tap into that super easily.

[jlt19]

I used Lightstream for a loan to do some home renovations at 3.99% for 3 years. Unsecured and WAY easier than anything to do with our home. They only loan to those with excellent credit at their lowest rates, but since you're on here, I'm guessing that's you

[Mushe]

Touché jlt19! I’ll take a look.

[lacey]

I guess I'm your husband in this senerio. I would probably not look at a heloc when it sounds like you have the money both in cash and stocks. If an emergency happens when cash reserves are low you'll have to sell the stock or consider other ways of getting money (heloc then?) but why plan on the emergency that might not to come? Unless one of you has an unstable job or the amount in the cash reserves are so low that you couldn't pay for a slightly more expensive month, I'd roll the dice. I guess my real answer is I would sell enough stock to keep about 10k in cash.

[Mushe]

Updated with our final choice!