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What loan for kitchen remodel?
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Posted by tombob (My Page) on Sun, Jan 7, 07 at 21:24
| W eare getting ready for a major kitchen remodel. While we have saved much of the projected cost, we will still need to borrow about $16-18K.
I am wrestling with seevral options: home equity loan, home equity line of credit or a personal loan. All seem to have advantages and disadvantages. The personal loan through my professional association is attractive because no collateral is required and the interest rate is competitive. I like the idea of not having to use the equity in our house for collateral, thus protecting our house.
the home equity line of credit, while on the surface attractive, seems to have many fees, penalties for eary repayment and is susceptible to ballooning interest rates.
If anyone can offer any advice or suggestions I would appreciate it.
Thanking you in advance. |
Follow-Up Postings:
RE: What loan for kitchen remodel?
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| I think you've pretty much answered your own question. If your PA can offer an unsecured loan with a competitive rate, you may pay a little more in interest, but you're not putting another lien on your house. That gets complicated. Are the payment terms similar -- or at least within the realm of reality? |
RE: What loan for kitchen remodel?
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| In general, if you take out a home equity loan, you can deduct the interest from your taxes. If you take out a personal loan, you can't. So unless you're in a really low tax bracket, you can save quite a bit of money through the equity loan. It's hard to say more without knowing the specifics, such as interest rate, term, fees, etc. |
RE: What loan for kitchen remodel?
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That is always a hard choise. We used a loan from our exhisting 401k. Not tax deductible but even a tax deductible loan would not have helped our taxex...home is paid for. And we only borrowed 11,000 as we had the rest in savings...7,000. For us that was easy, the repayments were out of payroll check. Also the interest was on 4 1/2%.
We did continue with our normal deposit into the 401 so we were only out the amount of interest that the money would have made while we were using it.
Karen L |
RE: What loan for kitchen remodel?
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| If the rates were comparable and all else is pretty much equal, I'd go with the home equity because of the tax deductability of the interest paid. Personal loans don't offer that feature. |
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