My husband and I bought our house 2 years ago. It is our starter house and we anticipate moving out in the next 3-4 years. We are having a sewage system put into our neighborhood and must pay a 00 tap in fee in addition to the amount it will cost to pay a plumber to dig a line from our house to the sewage system. We are looking at about 00 that we do not have readily available.
Along those same "home improvement" lines, I would like to renovate our kitchen. I thought that it might be a good time to look into a home equity line of credit to a.) help pay for our sewage and b.) help us pay to renovate our kitchen. I have only done a little reading on the home equity loans, and we can get a good rate from our credit union at 4.99%. I am wondering if we would get approved for ,000, and is it a smart move to get the home equity loan?
First, always always check out 2-3 other banks and see what rates they will give you. It is a tough market out there and they are fighting for business – your business.
Second, I would need more details. Are you getting a fixed rate loan or a line of credit? There are two home equity loans out there. The fixed rate/lump sum and the variable rate/ line of credit that works like a checking account. A variable rate might do you well if you can pay it off this year. The rates are not going to sky rocket any time soon. But if it will take a while to pay back – a fixed rate might be better.
I can’t tell if $8000 is good or not without knowing how much you paid for the house and how much the house is worth – otherwise known as your equity. Your loan to value is a necessary number in order to come with your rate and loan amount and whether it is a "good deal".
Of course, it is always best to save up the money and pay for things without borrowing. Have a goal of say $10,000 in a money market account and borrow from yourself. Then, pay it back to yourself in little chunks.