home equity loan or take from portfolio?
I've been lurking on this board for a while and I hope some of you will share your thoughts and help us decide the best option. We need a home improvement/repair to our house which we have owned for 6 years (almost 7!) It was in fairly good condition when we bought it so we've done no significant repairs or updates. The cost of the improvement would be about 30,500, roughly 10% of the value of the home.
We have no debt other than the mortgage, have been investing in my husband's 401K and we both Roth IRAs. We also have a portfolio that is about twice the value of the mortgage.
Should we dip into the portfolio --sell an investment to pay for the needed home improvement/repair-- or get a 15 year equity loan instead? We'd probably want to pay the loan off in five, and would work to pay it off in three because we hate debt.
I think we should take the loan at 4.25% because in theory the invested money could earn more than that over the life of the loan --however long that is-- and beyond. Even if our investments only make 3% we would still have the potential future earnings, correct? A few years ago we were able to take some profit from our investments and buy a car, but in this market we feel a bit uncomfortable doing that.
Which is the better choice?
Thanks for your thoughts!