Progress...I can hardly believe it!

treehugger · **Progress...I can hardly believe it!**

We've been working on paying off some bills, but for some reason

they just wouldn't go away! Well, this year has been different. We used our income tax refund to pay off our line of credit and start an emergency fund. We just recently got a little bit more unexpected money and we paid off our credit card (all but $500 to be paid next month). All that is left is 4 months on my truck and then 1 year on dh's. I will be able to use the extra money to get his paid off in no time. The only bills left will be our mortgage and our monthly expenses. I never really envisioned getting this far!!!!:happy dance:

Now, I know this may seem counter productive, but we are planning to put an addition on our house. I was planning to do it next spring. But now I don't know. What do you think, will interest rates be going crazy by then? It will definately have to be done with a loan, I won't put a second mortgage on the house...NO WAY! What is the best type of loan to take out for this, a home equity loan? We refinanced a few years back and got an extrememly low interest rate on our house (4.65% fixed). But does that mean that was a completely new mortage, if so how does the equity part work...I'm a real dunce when it comes to this type thing. How do we do this and should we do it in the fall or should we wait?????

searching4 · 06-26-2007, 08:31 AM

Sorry, can't help you with your question about the addition but I just wanted to congratulate you on getting your debt paid offf....that's wonderful!

Adda15 · 06-26-2007, 10:04 AM

Me too....no help on the reno question but I'm thrilled for your progress. I still remember the feeling when we paid off everything (excluding mortgage) and that's what keeps me motivated day to day.

Schmare528 · 06-26-2007, 11:14 AM

When you refinanced did you roll the equity back into the house? If so I would then if it was me I would take a home equity line of credit to pay for the addition.

newlywed0610 · 06-26-2007, 01:30 PM

I am also NO HELP with the whole house thing, but I just gotta say this about killing your debt:

Whoo-hoo! Yee-haw!! Yippee-Ki-Yay!!!!

ember15 · 06-26-2007, 11:34 PM

You have to look at the total of what your addition will cost would it be less to just buy a bigger home. You need to factor in all the costs, and what ifs. What if build supplies go up in price or something is back ordered. We had an company re insulate our attic. We had the estimate done in December and they said mid January and we called and called and called and around May they finally came out and did the installation they said it was a supply issue. My point is can you handle a delay, having your home and life turned up side down for a year.
I would go with an equity line of credit mainly because you can use just what you need and go back for more while with a equity loan if you go over the amount you may need to take out an additional loan. Still compare your options one thing I have learned about any sort of remodel is that very rarely will it cost less then anticipated

Kim · 06-29-2007, 10:59 AM

Generally you can get HELOC (home equity line of credit) loan for the amount of equity in your house. If your home is worth $250,000 and you owe $200,000 on it you have $50,000 of equity. Be sure that the amount you're spending will add that much value to your home, otherwise you could end up upside down with your financing (owing more than your home is worth) should you have to sell. Be careful, some appraisers will tell homeowners their home is worth more than it actually is, which can lead to being overextended with the HELOC. It can also be tempting to use the money for other things that don't add value to your home (some people use HELOCs to buy furniture, go on vacations, etc. which isn't a very good idea). I'd suggest running your home improvement ideas past a couple of realtors to see what they think and how much value you would add to your home by doing them.

Congrats on accomplishing your other goals!