Author Topic: HEL for BOL  (Read 1795 times)

Offline Rookinde

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HEL for BOL
« on: November 30, 2009, 04:19:29 PM »
My wife and I have a nice set of equity built into our home rough est... is around 100k. Now would it be a wise move to cash out the equity and buy out right a BOL, and slowly make the move to the location. My wife and I keep talking about it all the time. The only debt we have is a mortage of 52k and a couple of hospital bills. We own our cars out right. I would like to hear all the pro's and all the con's.

Thank You,
Rook

Offline Pathfinder

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Re: HEL for BOL
« Reply #1 on: November 30, 2009, 04:42:48 PM »
Cashing out equity is more debt - almost always a bad idea.

Set aside 6 months expenses before doing anything. Then, focus on taking every spare penny and paying off all debt, starting with the lowest hospital bill. The roll over when that one's paid off and pay the next, keep doing it until ALL debt is gone - even the mortgage. Once that's gone, set aside the huge amount you've been paying for mortgage and hospital bills and look for a BOL. With the right attitude - Ramsey calls it being gazelle focused, as in gazelles are focused on keeping alive - you should be able to complete everything with 2-3 years, maybe less. YMMV.

You may (only you know for sure your financial situation) be able to rid yourself of all non-mortgage debt, then save for BOL and pay off the mortgage early (as in 2-3 years) as well.

Good luck, and keep us posted.

Offline bubtech

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Re: HEL for BOL
« Reply #2 on: November 30, 2009, 07:58:44 PM »
What pathfinder said... +1.
Although I would offer another option....
After all your consumer debt is paid off... i.e. everything but the mortgage... save and save and save (while paying extra on the mortgage).  Get a down payment for the BOL (30% or more) and get a mortgage on that property separate from the main house.  WHY you may ask???
1.  If something bad happens financially you can let "them" take one and you will keep the other.
2.  In some states the "vacation home" is treated differently in bankruptcy/forclosure court.  It is actually harder for them to get.

Offline Rookinde

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Re: HEL for BOL
« Reply #3 on: December 03, 2009, 04:42:53 AM »
Thanks for the great advice. I plan to get this done like I was putting out a fire to save my home. While also prepping the things I need for here.

Rook