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HELOC it is

June 13th, 2010 at 03:06 pm

Itís been some time since I have posted a money related blog. I have been caught up in life (work) and less caught up in money. I think it is because our budget and expectations have finally settled down since The Impulsive Purchase. We have the same amount of money back in the bank that we used as a down payment on the property, itís been a few months and the place (and tenants) are showing no signs of problems. And I have tenants lined up to move into the upstairs unit. Theyíll be signing the lease on Wednesday. The only cause for concern I have is that the air conditioner is leaking when I run it. BB says he thinks the pipes are clogged. I'll be calling a maintenance man tomorrow. Luckily I have been saving up for an air conditioning tune up and have $300 saved. I hope that will cover whatever is wrong.

So this weekend I called around about securing a HELOC or HEL on our property so that we can start the process of converting The Impulsive Property into a SFH. I think we are going to go for a HELOCÖitís cheaper-ish than a HEL. Itís a variable rate interest that concerns me- but we can leave it dormant for several months (construction is not scheduled to start until October) without having to pay anything, and we can pay it off and leave it open as we need.
BB initially wanted to get $50k but based on the equity I think we will qualify for $25-30k. This makes me happy. It will keep us more efficient and less extravagant. I thought of taking the amount out of my inherited IRA but decided against it for a few reasons:

I donít want to mix my inheritance into my and BBís stuff. In the event of a divorce the property would be split despite the fact that my inheritance paid for almost the whole thing.

I donít want to get into the habit of using the IRA as an ATM. I decided long ago it would be for retirement and thatís what it will be for. People donít raid their retirement accounts for house renovations (or they shouldnít) and I am not an exception.

The stock market is crazy these days. Maybe some people say I am taking money from investment stocks into another investment vehicle but I want to try and be diversified. So the money stays in stocks.

I am of course not happy about taking on additional debt but think that the long term rewards will be worth this risk.

2 Responses to “HELOC it is”

  1. Homebody Says:

    You are very smart not to comingle inherited fund. No matter how much we think we are going to stay married, you never know what might happen. On the other hand, my inheritance from my father was so small, $10,000, that I used it to replace our roof 5 years ago. I will not comingle my inheritance from my mother.

    I know what you mean about not blogging about finances when they calm down. That is sort of how I am feeling since turning it all over to DH.

  2. whitestripe Says:

    you're very smart. it's hard to think of those things, you never know what will happen. despite what people thought on this blog when DF and I were buying our house (the whole fiasco with us not being married which annoyed me on all levels) DF and I talked about it a lot (separating). and we talk to other people too. It's important to have a clear head about it, and unfortunately a lot of the time people never have a clear idea of their relationship and money. it's either 'we're in love, nothing will ever happen' or 'i hate you, and it's all mine'. LOL. While the laws are different here and we're both protected regardless of marriage, we made sure to talk openly with family and friends, so that everyone knows where we stand regarding property and money etc. (eg: 'IF' we were to ever split, the house would be sold and the money halved, etc) neither of us are vindictive people, but you just don't know what will happen I guess.

    oh, and with AC, have you cleaned it out? DF's dads one leaks sometimes, and it's usually when he just forgets to clean the filters after using it on hot summer months.

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