Home Marketability and Personal Finance Question

20 years ago

Really want to replace my old, outdated windows and can do it for less than $3,700. Godmother thinks I should delay or eliminate the window purchase and instead, focus on paying off my credit card debt of $16,000. She feels I don't have to get the windows replaced now since I don't plan to sell the house in less than 8 years (my planned retirement time). Fortunately, I'm able to pay much more than my minimum credit card monthly amounts and plan to pay for the windows with my $10,000 HELOC. I calculate the credit card debt and HELOC debt can be eliminated in less than 5 years. By the way, the credit card debt was for nothing frivolous. Also, the appraised amount of my house at this time is about $60,000 more than the mortgage debt. I'm sure the new windows (nothing fancy) would increase the marketability of the house, help to make the house less drafty, and may offer a state tax credit. Thanks for your opinion.

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Comments (4)

dave_donhoff
20 years ago
Hi Adnemra,

As answered on your crosspost;
http://ths.gardenweb.com/forums/load/realestate/msg1015371022912.html?5

I'd lay out the details specifically, & compare financially...

1) What is your credit card interest rate? (Note, it is NOT tax deductible, so it hits you full force.)
2) What is your HELOC interest rate? (Fully tax deductible, so factor it reduced by your tax bracket,)
3) What is the realistic energy cost savings (if any) in changing out the windows,
4) Are there any local agency or company subsidies for energy-efficient improvements?

Add up the realistic total benefits, and compare against the realistic total costs.
(In any case, you're likely well advised to pay off the credit card balance entirely with the HELOC.)

Cheers,
Dave Donhoff
Just some mortgage guy ;~)

Here is a link that might be useful: Other thread on Homebuyer's
gina_in_fl
20 years ago
You must be having an 'out of mind' experience. Get rid of your CC debt before you even THINK about more debt. Windows ain't worth what you want to do.
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"The cost of renovating the investment property is an expense (current or amortizable), including the costs of financing. Keep all your investment expenses separate from your personal assets. Don't use a HELOC on your primary residence to finance improvements on your investment property." First, expenses do not get amortized. Improvements and replacements adjust your basis, repairs are expensed. If something is being amortized it is not expensed. Next, always use the lowest interest rate available to finance your rental properties. Which is usually a HELOC. It doesn't have any bearing on the deductibility of interest. From the very beginning (March 1989) my rental properties build equity in my residence, my residence then finances the rental properties. The interest is tax deductible but at a better rate than any loan I can get otherwise. The HELOC on my current house, which I have been in for six years, has purchased several properties. Every penny of interest I have paid on the HELOC has been tax deductible. As for risk... Get umbrella insurance. Otherwise the rules for attachment from investment property to residence are pretty nuanced and likely will attach anyway. So, in most states, you are paying higher interest rates for no additional protection.
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joyfulguy
20 years ago
What interest rate are you paying on credit card debt?

Considering that most of the regular cards charge rates around 15 - 18% (most store-issued cards charge 25 - 28%) you should not pay only minimum required monthly payment.

Suppose I loaned you $100.00. I said that you had to pay me $28.00 annually as rent on the money. That'd be before you paid off $1.00 of the loan. You'd swear at me and call me a stinker - and you'd be right.

But many people willing pay stores $28.00 per year as fee for carrying a $100.00 loan.

Not my idea of a good time.

Best save every dollar that you can and pay the card debt(s) off as quickly as possible, paying largest amount on the cards charging highest interest rate.

If possible, find a way to use heavy sheet plastic to make a storm window on the inside of the current windows. If you'd like some ideas about how to do it, email me. If they leak air around the outside of the frame, caulk that area.

Get your dollars working for you, not the store or the bank.

Good wishes as you get your priorities lined up with regard to the bills and proposed window replacement.

joyful guy
CindyBelleZ6NJ
20 years ago
I agree with the above posts, get rid of the credit card debt first; then save what you were paying "more than the minimum" up until you can replace the windows. Think about using anything else you can to make the windows warmer-draft snakes; bubble wrap for those windows that don't face neighbors, maybe the back ones, or the pink styrofoam insulation; maybe cut up some mattress pads and make linings for your drapes, buy shades or mini blinds, cheap, on sale if you don't have anything on the window under your drapes now. I eventually should upgrade my windows as well, but the cost is huge, lots of windows, so I am "making do"; also wearing lots of layers, etc.

Home Marketability and Personal Finance Question

Comments (4)

dave_donhoff

gina_in_fl

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