xp: financial advice? long

jeapplegate · March 2013

I'm hoping some of you more financially suave ladies can give me some advice. The situation is we need to finish our attic before the baby comes to make room. This will turn our 875 sq ft, 2 bd house into a 1100 (at least) sq ft 3 bd house.

The problem is we don't really have the cash on hand to finance the project. We have a chunk that we could use, but then we wouldn't have money for my maternity leave. We as a family have decided to place a priority on me being home for 3 months with each of out children. I have already pretty much hit our savings goal for this, so I could probably eat into it a little and still replace it, but I hate to take that chance as we will have medical bills coming it.

We have looked into a home equity loan, but we have only been in our house for 3 years. We could get about 1/2 to 2/3 for the money we need that way. We are also looking into refinance. I think we could get closer to 3/4 of the cash by the time we pay fees and such but it seems like refinancing is an expensive way to get the money due to the fees. We have no experience with either - any thoughts on the pros and cons would be great.

My mother had mentioned that sometimes you can get a bank to take into consideration the value that the improvement will add to your house. Our bank didn't seem to do that sort of thing. I think if they did this, we would easily be able to get the money. Has anyone heard of this?

Our other option besides dipping into our savings is to borrow the difference from our 401K. We could comfortably pay it back in 2-3 years.

A side note, we also need to finish redoing our kitchen. I need about 5k to do this. I've given up on the idea of doing this before the baby comes, but if somehow I could come out if this with enough to also do the kitchen I would be a happy girl. I cold take it out of my 401k, but that just seems naughty. I could maybe do half cash, half 401k...but I think I had best not go there.

Any thoughts? Is it stupid to be considering my 401k? Is it better to take the home equity vs the refinance?

ravenclaw1 · March 2013

The only thing I can answer with confidence is that, yes, it's stupid to take from your 401k. You'll end up paying a massive amount of taxes and fees.

kje120 · March 2013

Don't take it from your 401k. You have 5.5 or 6 months til the baby is born, I would dip in to what you have saved for maternity leave and replace it over the next 6 months.

coraggiosa · March 2013

ravenclaw1:
The only thing I can answer with confidence is that, yes, it's stupid to take from your 401k. You'll end up paying

njjewel · March 2013

Have you looked in to home improvement loans?

Also..My boyfriend is a contractor, I just got him "square up" so that he can take credit card payments from home owners. Maybe try finding a contractor that will take cc payments for the

DaisyZH · March 2013

Personally I would try and make do with what you have for now. It sounds like getting the money for this improvement is not going to be easy. I know that borrowing from your 401(k) is not a good idea, and it doesn't sound like refinancing

disneyfan0511 · March 2013

kestock120:
Don't take it from your 401k. You have 5.5 or 6 months til the baby is born, I would dip in to what you have saved

NNGnome · March 2013

Just FYI, although we finidhed LOs reoom before he was born, ihe was 7 months before he actualy slept there overnight, this might be something to concider, as it is currently advised for b abies to stay in the parents room until 6 months to lower the S

jeapplegate · March 2013

We have estimates and the project is already bare bones with us doing all the finish work. This also makes it something that I don't want to try to do after the baby gets here. I also don't want M to share a room with the baby - she will be

Sony22 · March 2013

I agree with everyone who says do not borrow from your 401k. I would say refinancing the home is a good idea but I wouldn't get a home equity loan or second mortgage.

An idea, won't solve the whole problem but will lessen the upfront cost and gi

katiebenes · March 2013

NOT THE 401K! Do NOT touch that unless its literally your last option.
We had to two years ago when I lost my job right after we got married. I was out of work for 9 months... And the fees and taxes... ugh. NOT WORTH IT

jeapplegate · March 2013

njjewel:
Have you looked in to home improvement loans? Also..My boyfriend is a contractor, I just got him "square up" so

tittytwistertortoises · March 2013

Can you get an idea of what medical bills will cost? I called my insurance and was able to find out worst case scenario of how much it would be out of pocket since I am high risk and there is a chance for preterm. With that info we set that money aside.

jeapplegate · March 2013

And our interest rate on our mortgage is already pretty low. Refinancing will only bring it down 1% and this house is not part of our 10 year plan. Refinancing on it's own is a wash for us, but the fees really eat into the amount of cash we

mandyk1821 · March 2013

I agree with the previous poster: do NOT take out of your 401k. If I were you I would do a Home Equity and some cash as you go. Just because your primary bank won't do what you need shop around. Sometimes smaller local banks or credit unions have more fle

smilormarie · March 2013

I vote for having both children share a room and save up and complete the project later. Otherwise, could you borrow from family with a promise to repay after 1 yr?

Cleo421 · March 2013

The Home Depot cc/specials are a great idea, even if you did have the cash on hand. As long as you budget to pay it off in 12 or 24 months ... Whatever your terms are before interest kicks in. ..you'd pay it off in less time than your 401k loan. The reaso

jeapplegate · March 2013

We actually use CC alot too. We get the cash back and pay them off every month. We usually bring in r about $200/yr in cash rewards. That said, I only use interest free CC offers when I know I will be able to pay it off before it star

jeapplegate · March 2013

tittytwistertortoises:
Can you get an idea of what medical bills will cost? I called my insurance and was able to find out wor

daileym · March 2013

jeapplegate:
And our interest rate on our mortgage is already pretty low. Refinancing will only bring it down 1% and thi

jeapplegate · March 2013

daileym:
jeapplegate:<

jeapplegate · March 2013

The bank is offering no fees on the HELOC and the type of appraisal we have to get will be cheaper. I don't know if it is a special of if it is always like that. It is a credit union. With the refinance there will be closing costs and

daileym · March 2013

Guess I should have included in my first post that I specialized in refi, HEIL and HELOC loans as a loan officer before I became a SAHM.

I agree that a HELOC might be a great opportunity for you, especially since it'

daileym · March 2013

One more thing to look into is how long you have to own the home to borrow against it. A lot of times you have to sign that the house will not be on the market for a certain amount of time, or you pay a penalty if you close out the line,

1bratmom · March 2013

Nobody will agree with me but I think how much you have in your 401K and how old you are factors into.

<span style="font-size:10pt;font-family:Arial,

Want a personalized experience?

xp: financial advice? long

Re: xp: financial advice? long

Choose Another Board

Search Boards