watts_bar on Nostr: 1. Do you have six months of reserve cash? Always have a reserve. 2. Do you have any ...
1. Do you have six months of reserve cash? Always have a reserve.
2. Do you have any debt besides your mortgage? Car payment, credit cards, student loans? Pay off any debt and have a reserve before even considering other options.
3. 2.99% is lower than the inflation rate. You are basically arbitraging the dollar and making money off this loan. You will pay $136K in interest on a $177K HELOC if you carry the loan to term. If you sell the home and buy another you are looking at transaction costs of $60K to $70K. Also remember, that as the price of your home increases so does the price of other homes. Did you factor in the increased cost of purchasing a new home?
4. The payment on the HELOC will be approximately $1800/month, $21,600/year, $108K/5 years. With about $60K going towards interest and about $36K going towards principal during the first 5 years. Plus the cost of obtaining the loan. Even “no cost” loans cost something.
If my math is correct you are looking around at least $130K in cost, or around 73% cost to borrow today what you could stack in about 8 years. Not counting your current DCA and buying more during dips.
This isn’t about risk tolerance, your idea is just a bad investment.
2. Do you have any debt besides your mortgage? Car payment, credit cards, student loans? Pay off any debt and have a reserve before even considering other options.
3. 2.99% is lower than the inflation rate. You are basically arbitraging the dollar and making money off this loan. You will pay $136K in interest on a $177K HELOC if you carry the loan to term. If you sell the home and buy another you are looking at transaction costs of $60K to $70K. Also remember, that as the price of your home increases so does the price of other homes. Did you factor in the increased cost of purchasing a new home?
4. The payment on the HELOC will be approximately $1800/month, $21,600/year, $108K/5 years. With about $60K going towards interest and about $36K going towards principal during the first 5 years. Plus the cost of obtaining the loan. Even “no cost” loans cost something.
If my math is correct you are looking around at least $130K in cost, or around 73% cost to borrow today what you could stack in about 8 years. Not counting your current DCA and buying more during dips.
This isn’t about risk tolerance, your idea is just a bad investment.