Your situation is special because it sounds as if you're going to be paying off whatever loan(s) you have soon, when you sell the house. So, looking at your overall costs, the fees and expenses associated with a loan may be more significant in the overall cost of the money than the interest rate. So, whatever option you choose, be very careful to inquire about fees. Your payment will be lower if you combine all your debt into a new first mortgage, and your interest rate on a new first mortgage will also be lower than on a second. The issue of taking out savings versus borrowing to do these repairs is somewhat personal and somewhat hard numbers. Obviously if you're getting a better return on your investments than you'll pay in interest on borrowed money, leave your savings alone and borrow. Most people are in more of a gray area, with investments that pay about the same, or a little less, than they'll pay out for borrowed money. In this case I would still lean toward suggesting that you borrow rather than deplete savings. There is a lot of freedom and flexibility to having cash available when/if you really need it. One other question I would ask is, are you sure you need to spend this kind of money to ready your home for sale? If you have not done so, I'd suggest checking with a realtor. Sometimes you spend money to renovate, and then the buyer wants something different and rips it all out to do something else. It might make more sense to discount the price of the home and let the buyer make his/her own upgrades. That would save you a lot of hassle and possibly result in netting more money in your pocket on the home.

Hi gammyt, Unless you have a fairly high-ratio mortgage or are seeking a substantial loan, quite likely the lender may not be too worried about a precise evaluation. That said, though, with the recent mortgage problems, and general reduction in prices of homes in quite a few areas, perhaps they will be quite concerned, more so than they would have been a year or so ago. In any case, as part of the procedure related to setting up the loan, they may very well come out to make an evaluation on their own. Quite likely charging for doing so. If you have a connection with a realtor, quite likely that person would give you an estimate, even if only a rough one made after hearing a full description of the various aspects of the home, without coming out to look at it. Knowing nothing of your circumstances, other debts, including student, auto or of other kinds, I cannot speak with any knowledge of your situation. That said, I hope that you will make an attempt to get this loan that you are contemplating, paid off over a short term, if possible, especially if the reasons behind it have provided only a short-term benefit. When I see folks making a loan that they plan to pay off over, say, a five year period ... ... to finance a vacation which will take place this year only, it troubles me some. For the cost of that vacation is not only the money laid out now, but includes also the total amount of interest paid on that loan over the full term that one carries it. And repayment of the principal and interest is effectively a reduction in effective income over all of the period that you carry it. I am especially troubled, having been a personal financial advisor for a numbr of years, to see folks add such expenses to their e.g. 25 year mortgage ... ... which means that they'll be paying it off, plus interest, for 25 years. And, if they arrange to make no increase in the amount of their regular payment, it means that they don't really start paying off the principal of that loan until all of the earlier part of the mortgage is fully paid off - what, 15 years (oe more) down the road? What sense does it make to take a vacation, even buy a car, now ... and not start paying off the loan for 15 years? If you'd made a serious effort to have paid off the loan over a short period ... ... think of all of the other interesting/useful/enjoyable things that you could have done with all of that interest plus principal expense! Enough preaching ... about an issue that's none of my business! Good wishes for increasing skill at management of both your income and assets - nobody cares as much about your money as you (except someone that'd like to shift some of it from your pocket into his/hers). ole joyful

I don't think you need to do anything right now. If the house sells at a satisfactory price, then both the first mortgage and the equity loan balance will be paid off at the closing, and the balance (minus agent's commission, if your using one) will go to you. You definitely should NOT pay off the loan with your savings. That cash provides you with financial flexbility that you will lose if you pay off the loan. A recent widow should hang on to her cash reserves until life settles down and her financial situation becomes more certain. If the equity loan is a HELOC with a floating interest rate and the house doesn't sell by the end of the summer season, you probably should do a refinance and combine both loans into one so that you don't have to worry about the possibility of rising interest rates inflating the size of the HELOC payments.

I have figured out a budget for getting the house into good rental condition, and I think we can do that for $17K. We are going to proceed with getting a loan from Kevin's credit union (after I get my credit unfrozen) for $100K, $19K will go toward the price above what we want to pay in cash, and then $17K to perhaps $20K will go toward renovations. Whatever we have left over we will pay back to the credit union, but they are giving us a good rate at 3.7%. Whatever we pay off will decrease the amount of time we have to pay back the loan, but not the monthly payments. One repair we will need to make ourselves is the heater for the pool/spa. I estimate this at $3K, but it will be worth it because people have already told me that they are willing to pay the $40-$50 per day charge for heating the pool when they rent in the winter. In May through October, there will be no need to heat the pool, but we need to have that option to offer. The main renovation we will do will be to change the bathtubs to walk-in showers. That's what we want for ourselves, and people have told me that they do not take baths in rental properties and prefer the walk-in showers. Anyway, to answer my original question, it looks like we are going to use my brother's credit union (from Sony) for our loan, and I will be meeting with him tomorrow at 11:00 AM with the loan officer. Tomorrow morning Kevin will do the wire transfer for the escrow from his bank on the Sony lot, and I will meet him after that.