Loan on house or use credit?

iVillage Member
Registered: 05-09-2005
Loan on house or use credit?
6
Thu, 07-17-2008 - 1:13pm
We are looking at major foundation work on our paid for house. I hate to have a mortgage -- it worries me that if we can't pay, then we lose the house. I have some offers for 6% or so for life from various credit card companies. What do you think? I guess we could get a home equity loan, but that puts the house at risk. Just frustrated and worried right now. How about loans from 401K (for me, it's a 403B, since I am a teacher)? Would that be safer?
Thanks,
Megan
Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
Thu, 07-17-2008 - 3:07pm

Hi Megan - it's rarely a good idea to borrow from your 401(k) (or equivalent).

All my best,
Danni

iVillage Member
Registered: 09-20-2004
Thu, 07-17-2008 - 3:12pm

I would leave the retirement funds alone, and go with a cc or HELOC....just check the fees on both and go with whichever you can get for cheapest.

iVillage Member
Registered: 07-12-2008
Sat, 07-19-2008 - 10:12pm

Megan,


Do you make enough money to pay for the loan?

 

Steve

 
iVillage Member
Registered: 05-09-2005
Sun, 07-20-2008 - 12:04pm
Thanks to all for the input. I could get a 403b loan but they require you to repay it in 5 years. I would be able to get a loan for about 1/2 of what we need. And I am not really clear what the loan does to the 403b account: does it reduce the amount in the 403b, or is the $$ in the 403b like collateral for the loan? I'm pretty sure it reduces the amount of $ in the 403b, so the 403b would have less earning power during the time I am repaying the loan. On the other hand, I would be paying also an additional 6% in interest (which is far more than the 403b has made in the last 5 years (!). I have $30,000.00 in the emergency fund. We are looking at somewhere between $80,000.00 to $100,000.00 for this work.
I guess I really have a mental block on a home equity loan -- and from what I can see, the interest can change on a home equity line of credit (true??).
We were told we should do this foundation work fairly soon since the house would not be able to withstand much of an earthquake. We have cement foundations that have crumbled in some areas (yikes).
My husband gets about $800.00 per month from S.S. so the extra money is up to me to find.
Thanks for thinking about this with me.
Megan
iVillage Member
Registered: 07-12-2008
Mon, 07-21-2008 - 1:56am

Megan,


I hope you get at least 3 estimates for the work.

 

Steve

 
iVillage Member
Registered: 05-09-2005
Mon, 07-21-2008 - 2:38am
Thanks so much. I'll check both of the links.
Megan