Home Equity Loan?

[wikiwiki]

We have 10K car loan at 6%, 3k in student loans at 6.5% and are considering putting a fence in the backyard(~2k) - is it worth getting a home equity loan to consolidate everything and get all paid off? We have no credit card debt and are working to increase our EF now.

[Bob B.]

We have 10K car loan at 6%, 3k in student loans at 6.5% and are considering putting a fence in the backyard(~2k) - is it worth getting a home equity loan to consolidate everything and get all paid off? We have no credit card debt and are working to increase our EF now.

Probably not.

But, how much equity do you have in your house? How long until your car is paid off? How long until your student loans are paid off? What is the interest rate on the home equity loan? How long are you looking to pay back on the home equity loan?

How much do you have in your EF now?

Depending on how much you have in your EF, could you hold $1,000 in the EF, put the rest toward your backyard fence fund, and start saving for your fence fund? How long would that take? Are there things you could cut out (eating out, morning coffees, movies, etc.) to decrease the time it would take to save for the fence?

[wikiwiki]

House loan is 206k, appraised at $240k 2 years ago, car loan has 5 years left, home equity interest rate - not sure of that but wouldn't do it unless it was less than the student and car loan rates. I'd want to pay off the home equity loan in a few years - not draw it out.

EF is 5K and growing.

The fence isn't a must now, but if we were going to go to the trouble of getting a home equity loan, I'd like to do that as it would add value to the house.

I guess I'm just looking to consolidate everything but I don't know if a home equity loan rate would make it worth it.

[JustBill]

Probably wouldn't go heloc route for this, but I would suggest you look at refinancing that 6% auto loan through penfed.org at 1.99% however. Unless I could pay for the fence outright, I'd postpone that until I had the funds in hand.

[snafu]

There are often fees associated with HELOC which can negate any anticipated savings. You'll likely create significant savings by focussing your effort on paying off $3K SL followed by $10K car loan. Does experience sway your focus to EF? We've no knowledge of your expenses but as we start the 3rd quarter, you may want to review categories to make sure your spending and your priorities are aligned. Are your various insurances appropriate to your home, auto, etc? Do you know where the money goes? How much leakage [unaccountable]? Do you have items you no longer use, need, love that makes sense to sell?

[Jerry91]

If your property is free and clear or if you have ample equity in your property, then you can take out a home equity loan and pay off your student loans, car loan and other requirements. But, taking out such a loan may place your house in jeopardy. If you cannot pay off the loan, then your home will be foreclosed. So, unless you are sure that you will be able to pay off the home equity loan, its better to avoid this option.

[wikiwiki]

I am thinking now it doesn't make sense to do the HELOC - I was just considering it as a way to make the one payment. We just paid off our other car (this week!!) so I'm on a pay-off roll and was looking at ways to make it easier. Will continue to pay more than min on the SL and car loans and aim to get rid of SL by the end of this year. Just a nagging debt...

We are definitely at a turning point this year - slightly more income - so we have been able to pay these little debts off - just looking for quicker ways to.

Thanks for the feedback!

[bjl584]

Just keep in mind that the interest rate on a HELOC is in most cases variable. If the Fed starts raising rates your HELOC will follow.