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Rust never sleeps — finding financial piece of mind about living in an old house

We live in an old house and have a long list of repairs, maintenance, and renovation projects in our future.  We are setting aside money in our house sub account to cover planned maintenance and replacing the dishwasher in a year.  We plan to build our emergency savings up to $15K over a couple of years to cover catastrophic house repairs.   But for now we have only $2K in emergency savings, and we were feeling stressed about not having the money to cover a major repair.  We’d have to put emergency spending on a credit card, try to do an emergency loan, or pull the money out of another account.  

Our coach Sherry Johnson suggested opening a home equity line of credit with Summit.  This is a revolving line of credit.  You get approved to borrow a certain portion of the equity you’ve built up in your house.  In our case we asked for $20K and were approved for $25K.  

We had no application costs, in part because they did not require a home appraisal prior to approving the loan.  Once the loan is open, there are no annual fees.  That means we can keep the account open, even if we don’t use it, for free.  If we need the funds, we can transfer the money electronically from the line of credit to our checking account.  We can then write checks to cover emergency expenses.  

There is no prepayment penalty.  It’s a variable rate loan with the option to lock in an interest rate.  Interest paid may be tax deductible.  

Takeaway for the Week

What is more important than we realized:  finding no or low cost options to cover you financially while you build your savings can relieve anxiety and worries about future emergencies.  For us the home equity line is a great “free money” option — we have a $20K safety net at our fingertips and it’s free as long as we don’t use it. 

What is easier than we thought:  Applying for the home equity line of credit was easy.  Thanks, Sherry. 


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I'm so glad you found something to ease your mind. One warning, be careful about using that home equity line of credit because the balance can grow pretty quickly with an old home. I'm still shocked that we owe over $14,000 in our line of credit!??!?!

Andrea, you are sooooo right. Our plan is to never use this money. It is there to provide a safety net for emergencies only. If we want to remodel or travel, our plan is to save up for it first.

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