Should we take out a HELOC?

[ADisneyFamilyof5]

Hello all my fiscally responsible friends! I have posted a bit on this forum, but I am a daily reader and really inspired by you all. I could really use your advice. DH and I would love to landscape our yard. Aside from a cement patio, our backyard is a grass hill. With three boys, it is less then ideal. Not only is the lack of playing space a problem, DS8 is a competitive soccer player and currently can only practice on the cement patio and DS4 has a severe grass allergy. This past Christmas while we were hanging the lights, he was playing in the yard and had an allergic reaction to the grass. His eye swelled shut within minutes and were off to the ER. So, we would like to level the yard and put in turf. To do so we would need to take out a home equity line of credit. Currently our debts are our mortgage and a car loan. We pay our credit cards in full every month. We only purchase things that we can pay outright (aside from the car and house). We have a small amount saved in the bank for emergencies and are putting a small amount towards DH retirement. Do you think it is financially wise for us to take out a HELOC? Or should I wait until we can pay cash (probably in about 2 years)?

 

[afan]

I think if you can afford the additional payment it's more about your son's health and quality of life. You want him to play outside but the grass could cause a trip to the er, there's a cost to that as well.

Will he be stuck inside or only on the driveway for the next 2 years while you save?

Will you be in this house long enough.to enjoy the benefits of it since there's a chance you'd have to remove it and plant grass to.sell.

 

[gottalovepluto]

Hi! ...So, a HELOC is a huge decision and not one any of us can offer you good advice on tbh. Only you know your finances and only you can weigh the allergy issues of your child against those. Basically you and DH need to sit down and look at the math and decide if the cost is worth it to both of you right now. If you both think it's the right call have a financial plan to pay it off and stick to it- imho it sounds like you have the financial discipline to do that

Food for thought: what about your retirement? Maybe not right now, but there are options for stay at home spouses for retirement accounts that you may want to research for the future.

 

[MillauFr]

I've taken one out before. I see no problem using one for home improvements. Once interest rates dropped I refinanced my house and used the proceeds to pay off the line of credit.

 

[ADisneyFamilyof5]

I think if you can afford the additional payment it's more about your son's health and quality of life. You want him to play outside but the grass could cause a trip to the er, there's a cost to that as well.

Will he be stuck inside or only on the driveway for the next 2 years while you save?

Will you be in this house long enough.to enjoy the benefits of it since there's a chance you'd have to remove it and plant grass to.sell.

While he will not be stuck inside, we do modify his outdoor play. He can no longer play on the grass. We purchased a sand box for the patio because he loves construction/digging, but I am pretty sure that will not tide him over for 2 years. We have currently been in our home for almost 4 years and this will be our "forever" home... unless we win the lottery.

Hi! ...So, a HELOC is a huge decision and not one any of us can offer you good advice on tbh. Only you know your finances and only you can weigh the allergy issues of your child against those. Basically you and DH need to sit down and look at the math and decide if the cost is worth it to both of you right now. If you both think it's the right call have a financial plan to pay it off and stick to it- imho it sounds like you have the financial discipline to do that

Food for thought: what about your retirement? Maybe not right now, but there are options for stay at home spouses for retirement accounts that you may want to research for the future.

You are right that only DH and I know for sure. My only hesitation is DH is always willing to spend money and I am much more conservative. Aside from our mortgage and a car loan, we have never taken out debt to pay for something. He even made it through college without us having to take out a loan. I guess I am just looking for reassurance that this is a common practice and will not put us into financial ruin. I tend to look at things with a pessimistic view. Also, I had know idea stay at home spouses had retirement options. I will look into that. Thanks so much!

 

[MillauFr]

My only hesitation is DH is always willing to spend money and I am much more conservative.

Your improvements are a good use of a line of credit. Now if you were using the line of credit to take a Disney vacation I would think twice.

 

[disneymagicgirl]

I'd think we would need a lot of really personal financial info to be able to accurately guide this decision. But without knowing all that info I'd say based on the fact that you only save "small amounts" towards emergencies and retirement, I'd say it probably isn't wise to take on another monthly bill at this time. I hate that your kids don't get good use of the yard right now, but being prepared for both emergencies and retirement is very important.

 

[HHMcG]

Our Financial Planner advices everyone to have a HELOC (in case of emergency) and whether you borrow against it is a different issue.

Home improvements are a decent reason to borrow against a HELOC. Couple things to think about:
- how long will you stay in this house?
- is it possible for DS to outgrow this allergy? I would discuss prognosis with his allergist before investing $1000s.
- You mentioned DH is "always willing to spend money". Would having a HELOC sitting there tempt him to buy other things?

Only you (and DH) know your situation and know if you can afford an additional monthly debt.

Something that jumped out at me from your original post " putting a small amount towards DH retirement"
I would start maximizing this asap.

 

[MickeyMouseCD524]

Hello all my fiscally responsible friends! I have posted a bit on this forum, but I am a daily reader and really inspired by you all. I could really use your advice. DH and I would love to landscape our yard. Aside from a cement patio, our backyard is a grass hill. With three boys, it is less then ideal. Not only is the lack of playing space a problem, DS8 is a competitive soccer player and currently can only practice on the cement patio and DS4 has a severe grass allergy. This past Christmas while we were hanging the lights, he was playing in the yard and had an allergic reaction to the grass. His eye swelled shut within minutes and were off to the ER. So, we would like to level the yard and put in turf. To do so we would need to take out a home equity line of credit. Currently our debts are our mortgage and a car loan. We pay our credit cards in full every month. We only purchase things that we can pay outright (aside from the car and house). We have a small amount saved in the bank for emergencies and are putting a small amount towards DH retirement. Do you think it is financially wise for us to take out a HELOC? Or should I wait until we can pay cash (probably in about 2 years)?

I don't really have answer but my mother is a home loan officer and also deals with HELOC if you want to PM me I can put you in touch with her.

 

[barkley]

i'll just offer up that you need to take a look at and familiarize yourself with the changes related to taxes/heloc with the new tax plan. it may not be the case for your situation but I know that many have traditionally looked to these types of loans because of their interest deductibility which with tax year 2018 will come with some limitations.

as far as your plan for the yard goes i'll offer a couple of suggestions that we've used with some major 'landscaping' plans-

1. check with your local planning department to see if you would be allowed to change a sloped yard to a flattened before you spend money on getting plans made up. in some places the grading of yards is regulated b/c of a master plan for surrounding houses and run off/drainage. we lived in one area where the changes we wanted entailed putting in a drainage system in the lawn (under it) to compensate for the changes in grading. some places (like where we live now in the pacific north west) have strong land use regulations that prohibit changing existing grading altogether (w/us it's because of run off and wetlands).

2. if you can do it and want to potentially save some $$$$-see if you have any colleges or universities near you with architecture programs-specifically classes in landscape architecture. we contacted one near our former home and offered up to the instructor that if one of the students wanted an opportunity to build up their portfolio they could design our yard and then be provided with before and after photos. we ended up with a stunning design at no cost.

good luck with whatever you decide to do.

 

[kymom99]

You could get a home equity loan rather than line of credit. This is a one time loan and has a monthly payment with definite end date. You can't use it to buy other things, which may help if you think your husband may look at it as an opportunity to buy something else.

 

[ADisneyFamilyof5]

i'll just offer up that you need to take a look at and familiarize yourself with the changes related to taxes/heloc with the new tax plan. it may not be the case for your situation but I know that many have traditionally looked to these types of loans because of their interest deductibility which with tax year 2018 will come with some limitations.

as far as your plan for the yard goes i'll offer a couple of suggestions that we've used with some major 'landscaping' plans-

1. check with your local planning department to see if you would be allowed to change a sloped yard to a flattened before you spend money on getting plans made up. in some places the grading of yards is regulated b/c of a master plan for surrounding houses and run off/drainage. we lived in one area where the changes we wanted entailed putting in a drainage system in the lawn (under it) to compensate for the changes in grading. some places (like where we live now in the pacific north west) have strong land use regulations that prohibit changing existing grading altogether (w/us it's because of run off and wetlands).

2. if you can do it and want to potentially save some $$$$-see if you have any colleges or universities near you with architecture programs-specifically classes in landscape architecture. we contacted one near our former home and offered up to the instructor that if one of the students wanted an opportunity to build up their portfolio they could design our yard and then be provided with before and after photos. we ended up with a stunning design at no cost.

good luck with whatever you decide to do.

I only thought of power lines and needing to figure out that kind of stuff, I never thought I would not be allowed to do it based water runoff/drainage. I will look into this. The college/university landscaping class is a great idea. Thanks!

You could get a home equity loan rather than line of credit. This is a one time loan and has a monthly payment with definite end date. You can't use it to buy other things, which may help if you think your husband may look at it as an opportunity to buy something else.

If we do end up doing it, I think a home equity loan is the way to go. I like the idea of having an end date. Thanks.