Allllll of this is true

FBCoachSC® · 2025-05-28T12:26:03.219Z

Why shouldn't I take out my sweet sweet equity and completely redo the place? I mean take out a few thousands of doll hairs, remodel the rooms, new paint, new flooring. Have the yard landscaped, sprinklers put in. Put in a pull with a hot tub. I have the equity. I'm not selling anytime soon. Somebody tell me why that's a terrible idea.

When you take out a HELOC, you're not "accessing" your equity. Your equity is simply collateral used to sweeten otherwise normal loan. If the loan isn't paid, they can then use your equity and take your house.

For signing over the rights to a chunk of your house's value, they in turn give you a lower loan rate than say, a credit card. Probably around 10% vs. 20%+.

It is still a loan, you owe them the loan amount, plus interest, and the only time your equity is actually touched, is if you default, or sell your house, at which point you'd have to repay the loan, and interest anyway as they will have a lien on the sale.

If you can't save up for a year and do it, then I wouldn't take out a home equity loan. ALSO, don't think whatever you do with it will somehow be repaid in the value of the house. Most houses are already grossly overvalued today and will someday fall, erasing any benefit for the home value with the improvements.

Save up, pay for it yourself, and you're already getting an 10% or so discount. I've used HELOC's in the past, but never for more than I could pay back in 6 months. My HELOC is still out there sitting with a zero balance for several years now. It does help your credit score if you're responsible, fwtw.

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Re: GITT and talk me out of this financial decision: Re: HELOC

May 28, 2025, 11:38 AM

Deciding whether to take out a home equity loan for home improvements, including adding a pool and hot tub, depends on several financial and personal factors. I don’t have specific details about FBCoachSC’s financial situation, but I can provide a framework to help make an informed decision. Here’s a breakdown of key considerations:

Financial Considerations
Home Equity Loan Basics:
A home equity loan allows you to borrow against the equity in your home (the difference between your home’s value and your mortgage balance).
Interest rates are typically fixed but higher than first mortgages (currently averaging around 8-9% as of recent data). Payments are spread over a set term (e.g., 5-20 years).
You’re putting your home as collateral, so defaulting could risk foreclosure.
Cost of Improvements:
Pool: In-ground pools can cost $30,000–$100,000+ depending on size, materials, and location. Maintenance (chemicals, cleaning, heating) adds $500–$2,000 annually.
Hot Tub: A quality hot tub costs $3,000–$15,000, with installation and maintenance (electricity, water treatment) adding $500–$1,000 per year.
Other Improvements: Unspecified home improvements vary widely (e.g., kitchen remodel: $20,000–$50,000; bathroom: $10,000–$30,000). Get contractor quotes for accuracy.
Return on Investment (ROI):
Pools and hot tubs often have low ROI, typically 10–40% of installation cost, as they appeal to specific buyers and may not increase home value significantly in some markets.
Other improvements (e.g., kitchen or bathroom upgrades) tend to yield higher ROI (50–80%). Research local market trends to see what buyers value in your area.
If the goal is enjoyment rather than resale, ROI matters less, but consider long-term costs.
Financial Health:
Debt-to-Income Ratio (DTI): Lenders prefer a DTI below 43%. Calculate monthly debt payments (including the new loan) divided by monthly income.
Credit Score: A score above 680 typically secures better rates. Check your score to estimate loan terms.
Emergency Fund: Ensure you have 3–6 months of living expenses saved to cover unexpected costs or loan payments if income drops.
Loan Affordability: Use a loan calculator to estimate monthly payments. For example, a $50,000 loan at 8% over 10 years is ~$660/month. Can your budget handle this?
Alternatives to a Home Equity Loan:
HELOC: A home equity line of credit offers flexibility with variable rates, allowing you to borrow as needed.
Personal Loan: Unsecured, higher rates (10–20%), but no collateral risk. Suitable for smaller projects.
Cash Savings: If you have savings, using them avoids debt but depletes reserves.
Refinancing: Cash-out refinancing might offer lower rates but extends your mortgage term.
Personal Considerations
Lifestyle and Goals:
Will a pool and hot tub significantly enhance your quality of life? If you love entertaining or relaxing, they may be worth it.
How long do you plan to stay in the home? If less than 5–7 years, the investment may not pay off in enjoyment or resale value.
Consider maintenance time and effort. Pools require regular upkeep, which may be a burden if you’re busy.
Local Climate and Market:
In warmer climates (e.g., South Carolina, assuming “SC” in FBCoachSC), pools are more usable year-round and may add more value than in colder regions.
Check if pools and hot tubs are common in your neighborhood. Over-improving beyond local standards can limit resale benefits.
Risk Tolerance:
Are you comfortable with the risk of owing more on your home? Economic downturns or job loss could strain finances.
If home values drop, you could owe more than the home is worth (“underwater” mortgage).
Recommendation
Step 1: Assess Finances: Review your income, expenses, savings, and credit score. Ensure you can afford the loan payments without stretching your budget.
Step 2: Get Quotes: Obtain detailed estimates for the pool, hot tub, and other improvements. Factor in ongoing maintenance costs.
Step 3: Evaluate ROI and Goals: If you’re staying long-term and value the lifestyle upgrade, the investment may be justified. If focused on resale, prioritize high-ROI projects (e.g., kitchen) over a pool.
Step 4: Compare Financing Options: A home equity loan is likely best for large projects, but explore HELOCs or personal loans for flexibility or smaller scopes.
Step 5: Consult Professionals: Talk to a financial advisor to confirm affordability and a real estate agent to assess local market impact.
If FBCoachSC has stable finances, a clear budget, and a long-term commitment to the home, a home equity loan for a pool, hot tub, and select improvements could be reasonable, especially if personal enjoyment outweighs ROI concerns. However, prioritize high-ROI projects and ensure maintenance costs fit your lifestyle. If unsure, start with smaller improvements and save for the pool to avoid over-leveraging.

Would you like me to search for specific loan rates, local contractor costs, or market trends in South Carolina (or another area) to refine this advice? Alternatively, I can provide a chart comparing loan payment scenarios if you share approximate loan amounts or terms you’re considering.

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GITT and talk me out of this financial decision: Re: HELOC

There are 3 types of debt. Good debt, bad debt

I debated replying because I am pretty sure

Hi JoeT, and welcome to the Lunge.

I saw your disclaimer.

Re: GITT and talk me out of this financial decision: Re: HELOC

Have a mortgage until 2040

In the current climate one should attempt to limit their

Did you finish your bedroom remodel/addition?

Only thing I haven't done is the trim work and honestly I'm procrastinating

I would assume the interest rate would

a "pull"? You mean a cement pond?

Pool maybe, hot tub no. I'm about to sell a house with a pool, and

Oh yeah, and P.S. I basically did just that!

When I bought this place in 2019 I refused to even look at places with pools.

Hot tubs are extremely fun to watch go in the garbage truck smusher.***

My father in law has a pool at his house. We use that

Would possibly be a billionaire if he didn't have a ####### pool.***

I am excited to witness your upcoming purchases.

Why y'all gotta be so negative?

Re: Why y'all gotta be so negative?

Considering the success of your last renovation project

If you were to do what you want to do, what would your monthly....

According to my mortgage company I have a tight 50k to work with

But I mean my house is worth around 250 right now.

Might want to check on that. Usually a pool does not

It does if it's super infiniti pool with hot tub***

It does if a toddler drowns in it.***

House can't be worth 350 when nobody that can afford 350

There are single wides on less than an acre of land going for 200k

Are they selling?***

No clue. I haven't been on zillow in years

So you want to take out a HELOC and take 17 yrs to pay it off?...

But I'm about to get a significant raise***

great...makes it a lot easier to save quickly***

You always say this, it happens and nothing

Because my wife quickly adjusts her lifestyle requirements when I get one***

You want to do all that work you mentioned for $50K?

Allow me to adjust your point of view just a little bit.

This reminds me that I forgot the

So you're saying a reverse mortgage is better***

I'm saying paying for it yourself is best.

Re: GITT and talk me out of this financial decision: Re: HELOC

You missed the fact that this $250K estate is in a ########, SC.

Look at ROI and really, your house is your home ....

I want to see him do it. Pools, hot tubs, why not a new boat and truck, too?

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