crawfish333

Remember, housing prices vary greatly all over the country. For example, I live in ahouse worth $150K in Louisiana that would sell for $350K in other areas. Also, many "empty nest" people choose to live in the house they raised their family in rather than plunking down 500K for a house because they "qualify" for it. My wife and I could afford a much bigger place, but have no desire to move to a bigger house just to impress someone. Given those facts, I would say your statement may be flawed.

NFexec

This point may have already been made. But my input is that a HELOC is absolutely a good way to go SO LONG AS you pay it down aggressively, don't have other major financial liabilities coming up, there are no liens on the house, and you can't get a conventional car loan (credit union?) for more than 1% point less than your after-tax net interest rate on the HELOC. I use that as a personal judgement on the risk factor of using my house to pay for something else. But again - the most important variable is your payoff schedule. NEVER - repeat - NEVER pay the minimum monthly amount.

The argument about not having your home paid off by retirement if you use its equity is silly. You would be paying money for a car loan along with your mortgage payment, wouldn't you? So other than the temptation to pay the minimum monthly, how is your monthly cash flow any worse? It isn't.

Like just about everything else, it comes down to a personal value judgement and your own comfort level with risk and equity.

I personally WOULD do it - because I've done it before and paid off the HELOC amount very quickly. Others may not feel that way.



Doug

TMyers

There are plenty of places in the midwest where you can still buy a home for less than a 100K

FortMorganAl

I own 2 homes. Both 3 bedroom/2 bath/just under 2000 sq. feet and in similar style neighborhoods. The one in the south was just appraised at $362K. The one in the midwest is $68K. In 1979 I was considering a move to Silicon Valley. Even back then these houses were well over $1M there. As they say, location, location, location.

MNVette

Since you asked, here's my $.02.

As I have stated numerous times in here, financing a purchase like a Vette is a stupid idea. All the financial types out there will chime in that they can make more via investing the cash they would have used paying for the Vette than they would buying the car for cash. Okay....for the 99.9% of the population who aren't Warren Buffet - it makes no sense to finance a car. It makes even less sense to put a lien on your home to pay for a car. Yes, yes....HELOC's are tax deductible. So what? It won't make that much of a difference to your overall tax bill, and you're still putting your home on the line for nothing more than a toy.

Bottom line - pay cash or forget it. Does that make me a snob? Maybe, but it is the only thing that makes sense.

wayne lowry

If you do that then you simply can not afford the car, buy something else or nothing at all. Purchasing a Corvette thinking if it gets tight I only HAVE to pay the interest is a great way to end up with nothing. Have you checked prices on a 96 "C4" or a 97 "C5" lately. Either can be had for 13K the C7 will KILL C6 prices. The LS3 is hurting the price of the 05s NOW. What do you suppose the will happen to the value of the 08s when the base model has 500chp ?

troy144

Based on social class, or what? Everyone has different wants and needs. Tough to generalize, you might find some financial "sleepers" out there with much more than you.... and with different tastes.

beaverwarrior

I thought about it but when we actually put it down on paper and compared apples to apples it didn't make sense to go with the equity loan, a simple car loan was what we decided.

clockworks

Huh? I thought you're a rocket scientist.

Amped

E-Loan has an in-depth calculator comparing auto loans vs. equity loans here.

The answer depends on one's personal situation. The finances are deterministic and can be easily calculated but a huge assumption is the length you expect to own the loan/asset. Home value is variable and a risk which can't be predicted.

I'm also looking to refinance my second mortgage to buy a Vette so that I may keep monthly payments as low as possible. This makes sense for me because I am assuming I will sell my house within the next 3 years and I have a low, 4.625% ARM rate on the first mortgage. If I assume I won't sell until after the ARM balloons (4 years), the E-Loan analysis correctly recommends refinancing everything into one, new fixed mortgage. In either case, my tax deduction increases and can be used to payback the loan while I "expect" my home value to appreciate.