I checked with some people I know at several banks this morning. Looks like HELOC rates for best credit are 9.50% and go up from there as credit scores decline.

When I checked my source they were at 9.1-9.5 depending on credit score. Mine has no fees but appraisal, no prepay penalty nor do you declare your intent to live there for a certain length of time.

In a lot of cases I think appraisals can be waived on HELOC loans but that is lender specific. The future use of the property after closing is a non-issue with any lender with which I am familiar.

thinking outside the box, I'm reading you can withdraw contributions to a roth ira after 5 years with no penalty regardless of age.

I rolled over a roth 401k into a roth ira back in 2016 or so and invested the ~$40k in a handful of stocks. It has tripled since then, so is this an avenue worth exploring?

I'm able to get 0% financing on one of the larger purchases in the project list, so what's left is maybe $15-$20k.

What are the pros and cons of pulling this out of roth ira for 0%?

I got a quote from american financing for what he called a '2nd mortgage', 15 year at 8.25%, $46k cash back (the lowest he could go) payback of $485 a month.
Or 30 year at 9% payback of $402.

Fees/costs are about $4k, so the loan is $50k.

This seems like a better rate than I'm finding elsewhere, is there something I need to know about 2nd mortgage?

62strat said:

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I got a quote from american financing for what he called a '2nd mortgage', 15 year at 8.25%, $46k cash back (the lowest he could go) payback of $485 a month.
Or 30 year at 9% payback of $402.

Fees/costs are about $4k, so the loan is $50k.

This seems like a better rate than I'm finding elsewhere, is there something I need to know about 2nd mortgage?

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Why would you do that vs a heloc? Maybe slightly better rate, but $4k in fees and higher withdrawal also means more interest.

I figured heloc rates were above 10%.. I reached out to Jja79, on second thought now I do think a Heloc is the way to go.

Mostly because I can get a chunk of this at 0% for 21 months on a credit card, then I can have my HELOC ready to go at that time to pay off whatever is left on that card. Hopefully rates have fallen some.

Did you email me?

62strat said:

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I figured heloc rates were above 10%.. I reached out to Jja79, on second thought now I do think a Heloc is the way to go.

Mostly because I can get a chunk of this at 0% for 21 months on a credit card, then I can have my HELOC ready to go at that time to pay off whatever is left on that card. Hopefully rates have fallen some.

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Just did a rough and overly simplified calculation.....

But you said you only needed $20K.

So with the 2nd mortgage (ignoring the minimum borrowed, just basically assumed in my calculations that you'd pay that extra off immediately), I calculated borrowing $24K, the $20K needed plus the $4K fees. At a 8.25% interest rate and assuming you'll pay $485/month (so taking your number and ignoring the new minimum payment after paying down the loan) it'll take about 60 months to pay off the loan and cost about $29K.

With the HELOC, ignoring the 12 month promotional period and also ignoring the interest only payments, assuming you'll pay the same $485/month, taking a high interest rate 10.5%, and borrowing $20K...you'll pay off the loan in about 50 months and pay a total of $25K.

Other advantage of the HELOC is you'll have the line of credit in case you ever need it.

I just don't see the smaller interest rate overcoming the fees on the second mortgage. Unless you're planning on paying the minimum on the life of these loans. Which probably isn't advised in either scenario.

Edit: I did basic excel formulas so these numbers may be a little off with what's extra going toward principal but I imagine they're close. It also ignores the variability of the heloc rate, good or bad.

jja79 said:

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Did you email me?

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well I thought I did earlier today(pm on this site)
But checking my pms apparently I didn't. Must have never hit submit. I was distracted a few times while composing.

I believe jja79 said they had a promo rate at 6,74% for the first year so that will skew the math even further toward the HELOC.

Jja79 has been contacted.