justme
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Post by justme on Dec 3, 2019 16:58:22 GMT -5
So most of you know I bought a condo 4 years ago. Well apparently the "slight water intrusion" on some windows of the complex turned into a MUCH bigger issue once contractors started spec-ing out the job. And unfortunately years ago the board settled with the construction company (who since have gone out of business so I'm not sure if it was a "this is all you are going to get out of them" or incompetence that made them settle for a small sum) so there's no help from that angle. So to fully fix everything is now millions of dollars and instead of a manageable assessment I'm now looking at something I can't afford to pay cash for unless I max out my credit cards (which is a dumb dumb idea). So my options from the HOA are 1) pay it up front Feb 15 or 2) pay it over 17 years with about $11k in interest. There's no paying it off early savings. And the letter did not give an option to pay some of it up front and finance the rest. The interest rate is ~3.8% It doesn't look like personal loans extend much past 5 years and they're at a much higher rate than the HOA has through their bank so not a good option. It looks like HELOC are possibly an option, but it's only the lowest rate if I get it the lowest rate (which I'm not sure they'll give to condos). Though it would let it be over a longer period of time. Looks like the best option is to refinance - though the condo does hinder my options some. Current rate is 4.49% and I don't think I can get much better than that now, but rolling it into the loan would cut the payment in about half. Based on current units being sold in my building I'm at about 68% equity. Taking the full amount out would put me at about 82%. I think PMI goes away at 80% so I might consider taking someone money out of savings to save on PMI which currently is around $70 (and would be higher than that with a higher loan so I'm thinking ~$100 savings). So I'm thinking refinancing wouldn't change my payment that much - it would just restart the clock. On the upside my HOA dues went down $37/month. My mom basically just was like you're smart figure it out. So..... HALP!!! What would you do? Where do I look to refinance? Is there an option I don't see?
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schildi
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Post by schildi on Dec 3, 2019 17:17:04 GMT -5
What's the total cost for one payment? And do you think this will have an affect on the value of the condo? This really stinks, I am sure many people there are not happy. What exactly is the proposed fix? I am sure the HOA got multiple bids, right?
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haapai
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Post by haapai on Dec 3, 2019 17:59:59 GMT -5
I'm not sure why you are convinced that you can't refinance at a rate better than 4.49%. Aren't 30-year mortgages a tad below 4% now?
Have you run the numbers for refinancing into a 30-year, 80% LTV mortgage at less than 4% and a HELOC or home improvement loan for the rest?
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justme
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Post by justme on Dec 3, 2019 18:05:06 GMT -5
I'm not sure why you are convinced that you can't refinance at a rate better than 4.49%. Aren't 30-year mortgages a tad below 4% now?
Have you run the numbers for refinancing into a 30-year, 80% LTV mortgage at less than 4% and a HELOC or home improvement loan for the rest?
Because it's a condo and the rates for condos are not the same as single family homes. If you know of someone that is financing condo loans for less than 4% I'd appreciate the name. A quick look has HELOC at the lowest of 3.49% but I'm assuming it's similar to regular mortgages where no one will give condos those rates.
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justme
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Post by justme on Dec 3, 2019 18:10:59 GMT -5
What's the total cost for one payment? And do you think this will have an affect on the value of the condo? This really stinks, I am sure many people there are not happy. What exactly is the proposed fix? I am sure the HOA got multiple bids, right?
Essentially stripping the entire exterior down and rebuilding it (not sure if it's quite to the studs but all the stucco it's coming off and some of the stuff under it). Apparently the builder didn't put all of the proper stuff on which has cause water to intrude in spots so they have to repair those parts and then put in the proper weatherproofing and such. To guarantee that work everyone is getting brand new windows. They've gotten several bids and have selected one. They also contracted with a SME to go over the bids and help them select the winner. He'll also be the liasson between the HOA and general contractor since no one on the HOA knows construction. They've vetted the construction company. The payments are based on square footage and mine is right in the middle with a one time cost of 30k and change. 😳😭
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Post by Deleted on Dec 3, 2019 18:22:01 GMT -5
So the amount is a little over $30K? Ouch. I'd definitely look for alternative financing.
First, it would give you the freedom to pay whatever you're comfortable with up front and thus reduce your monthly payment. Second, from what you've said, if you sell the place in 5 years you still owe all the interest. A fair payoff amount would give you credit for about $5K in interest for early repayment. Even if you get a slightly higher interest rate you might be better off.
Do you itemize? That would give you about another $1,000/month in mortgage interest if it qualifies, which I think it does because it's for improvements to the condo.
And don't feel bad- this stuff happens with free-standing homes, too. I live on a beautiful lake with a dam that's got a slow leak. We're trying to get estimates to fix it but no one wants to do work on private property. If we ever find someone we're definitely on the hook for an assessment even though we've got some reserves built up.
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saveinla
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Post by saveinla on Dec 3, 2019 18:22:22 GMT -5
How many windows are we talking about?
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sesfw
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Post by sesfw on Dec 3, 2019 18:24:52 GMT -5
That stinks .......... sorry you are having to go through this.
Wish I had some ideas for you.
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CCL
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Post by CCL on Dec 3, 2019 18:25:01 GMT -5
Yikes! We've considered buying condos, but always hesitated because we were afraid of unpredictable expenses like this.
It seems like refinancing the whole thing might be your best option. You could refi and still have the option to pay extra and eliminate the additional portion. I'd definitely try to drop the PMI. Sometimes you can pay it up-front and save some money. We did that when we bought this place. I managed to talk the seller into paying it for me, but it was less than we expected.
Are they charging you extra for a cash-out refinance?
FWIW, I'm refinancing my single-family for 3.5%.
Sorry you are dealing with this:(
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justme
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Post by justme on Dec 3, 2019 19:27:01 GMT -5
How many windows are we talking about? A lot. About 300 units and I'd guess on average each unit has 4 windows (some have 2 with French doors a couple have 6). So around 1200 windows. And even though I'm saying 4 most are two sets of 2 windows - not sure if that's more or less?
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justme
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Post by justme on Dec 3, 2019 19:31:27 GMT -5
So the amount is a little over $30K? Ouch. I'd definitely look for alternative financing. First, it would give you the freedom to pay whatever you're comfortable with up front and thus reduce your monthly payment. Second, from what you've said, if you sell the place in 5 years you still owe all the interest. A fair payoff amount would give you credit for about $5K in interest for early repayment. Even if you get a slightly higher interest rate you might be better off. Do you itemize? That would give you about another $1,000/month in mortgage interest if it qualifies, which I think it does because it's for improvements to the condo. And don't feel bad- this stuff happens with free-standing homes, too. I live on a beautiful lake with a dam that's got a slow leak. We're trying to get estimates to fix it but no one wants to do work on private property. If we ever find someone we're definitely on the hook for an assessment even though we've got some reserves built up. I was not able to when they switch over to a 12k deductible or whatever it is called. I pretty much only had my house stuff to itemize so mortgage, pmi, 2k in property taxes, and then whatever they calculate for states sales tax as there's no state income. I do wonder what happens if you sell. Since the payment plan is automatically chosen if you don't pay by the date it's not like they're running your credit. A lien on the unit? Just in your name? But yes that's a big part of why I'm looking at other options. It's $200 a month for 17 years with them.
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justme
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Post by justme on Dec 3, 2019 19:35:17 GMT -5
Yikes! We've considered buying condos, but always hesitated because we were afraid of unpredictable expenses like this. It seems like refinancing the whole thing might be your best option. You could refi and still have the option to pay extra and eliminate the additional portion. I'd definitely try to drop the PMI. Sometimes you can pay it up-front and save some money. We did that when we bought this place. I managed to talk the seller into paying it for me, but it was less than we expected. Are they charging you extra for a cash-out refinance? FWIW, I'm refinancing my single-family for 3.5%. Sorry you are dealing with this:( I'm kicking myself because I've been meaning to redo the floors and I'm afraid it will lower the appraisal as the carpets are stained from the previous owner. I figure it's more because when I first bought it SFH rates were under 4 and I got 4.5% because it's a condo. Searching quick on bankrate had options from 4-4.9 for condos depending on lender. No idea if there's lenders out there top stay away from?
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alabamagal
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Post by alabamagal on Dec 3, 2019 19:36:44 GMT -5
Why not just finance through the HOA at 3.8%. That looks like lowest rate?
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justme
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Post by justme on Dec 3, 2019 19:48:18 GMT -5
Why not just finance through the HOA at 3.8%. That looks like lowest rate? I'm not completely against it. But while I calculated it out to approx 3.8% in reality I'm paying the full interest cost whether I take all 17 years to pay it off or sell it in two years. So it would be 11k in interest on a two year loan. Which is probably more like 30% interest if that happens!! If I refinanced my mortgage and roll the cost in there I'd only pay more interest if I paid the note for the full 30 years. If I sold it in two years it'd only be two years of interest. Plus rolling it wouldn't change my payment much. If I got under 4.49% or got rid of PMI my mortgage payment will barely change vs a $200 expense through the HOA deal.
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Post by Deleted on Dec 3, 2019 19:59:18 GMT -5
I do wonder what happens if you sell. Since the payment plan is automatically chosen if you don't pay by the date it's not like they're running your credit. A lien on the unit? Just in your name? I'm on my HOA Board and the liens we file when people are over a year behind on annual dues (or who haven't paid an assessment we had back in 2014 for dam improvements) must be paid when the house is sold. The mortgage is primary, of course, so we get paid only if there's enough equity left after the mortgage is paid. We just collected on a few this year. So, you'd probably be compelled to pay it off if you sold. At some point I'm guessing you'll have to sign papers acknowledging the loan and should read them carefully to see if this is how it works.
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Post by Deleted on Dec 3, 2019 20:00:40 GMT -5
Well, you just turned me off condos. Four windows shouldn't cost you $30,000. I understand it is a massive amount of work, but the assessment should be based on the number of windows and other openings (French doors) that you have. Maybe it would work out the same, but to simply base it on square footage is like the apartment complexes that base water usage on number of bedrooms vs. number of occupants.
I don't have any answers, but you do have my sympathy. That is truly an awful assessment.
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justme
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Post by justme on Dec 3, 2019 20:24:50 GMT -5
Well, you just turned me off condos. Four windows shouldn't cost you $30,000. I understand it is a massive amount of work, but the assessment should be based on the number of windows and other openings (French doors) that you have. Maybe it would work out the same, but to simply base it on square footage is like the apartment complexes that base water usage on number of bedrooms vs. number of occupants. I don't have any answers, but you do have my sympathy. That is truly an awful assessment. Some of it is due to the building being built in the building boom of the early 2000s. Either the inspectors were paid off or didn't give a shit, but the extent of the corners being cut weren't evident until contractors actually stripped selve of the stucco away. So definitely avoid any condo built during building booms! It's more then just windows. It's basically a brand new exterior from scratch on a building 6 stories high with around 300 units. Not so small. And I dunno if it's state specific, but the lawyer said they couldn't add a fee onto the townhouses that had more windows. Had to be an even application of the fee and going by windows would have the two bedrooms pay twice as much as the one bedrooms even though most were only 50% bigger or less. Just glad I didn't get a bigger unit!
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justme
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Post by justme on Dec 3, 2019 20:27:01 GMT -5
I do wonder what happens if you sell. Since the payment plan is automatically chosen if you don't pay by the date it's not like they're running your credit. A lien on the unit? Just in your name? I'm on my HOA Board and the liens we file when people are over a year behind on annual dues (or who haven't paid an assessment we had back in 2014 for dam improvements) must be paid when the house is sold. The mortgage is primary, of course, so we get paid only if there's enough equity left after the mortgage is paid. We just collected on a few this year. So, you'd probably be compelled to pay it off if you sold. At some point I'm guessing you'll have to sign papers acknowledging the loan and should read them carefully to see if this is how it works. I figured. It just really sucks that it's either X or X plus flat fee of Y regardless of when you pay it off.
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giramomma
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Post by giramomma on Dec 3, 2019 23:50:08 GMT -5
I'm kicking myself because I've been meaning to redo the floors and I'm afraid it will lower the appraisal as the carpets are stained from the previous owner. I wouldn't worry about that. We never changed the carpet in the 6 or so years that we lived in our condo. I did insist on new flooring in the kitchen. There were gouges and you could see the tile below. We also had a few nicks in our counter. We just cleaned really well and repainted.
We still sold our condo in 6 weeks after the housing market crashed in 2007. We would have sold the condo in two weeks, but the buyer wanted to get approval for his dog from the board before he made an offer.
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justme
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Post by justme on Dec 4, 2019 0:04:20 GMT -5
I'm kicking myself because I've been meaning to redo the floors and I'm afraid it will lower the appraisal as the carpets are stained from the previous owner. I wouldn't worry about that. We never changed the carpet in the 6 or so years that we lived in our condo. I did insist on new flooring in the kitchen. There were gouges and you could see the tile below. We also had a few nicks in our counter. We just cleaned really well and repainted.
We still sold our condo in 6 weeks after the housing market crashed in 2007. We would have sold the condo in two weeks, but the buyer wanted to get approval for his dog from the board before he made an offer. They need to be changed anyways as I think there's a good chance they are original. But there's a big blech strain and a big what i think is wine stain. Plus some smaller ones. Just have no idea how much it'd take down the appraisal. Or maybe if it's worth buying rugs to cover the bad parts up lol
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zibazinski
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Post by zibazinski on Dec 4, 2019 4:32:45 GMT -5
I wouldn't worry about that. We never changed the carpet in the 6 or so years that we lived in our condo. I did insist on new flooring in the kitchen. There were gouges and you could see the tile below. We also had a few nicks in our counter. We just cleaned really well and repainted.
We still sold our condo in 6 weeks after the housing market crashed in 2007. We would have sold the condo in two weeks, but the buyer wanted to get approval for his dog from the board before he made an offer. They need to be changed anyways as I think there's a good chance they are original. But there's a big blech strain and a big what i think is wine stain. Plus some smaller ones. Just have no idea how much it'd take down the appraisal. Or maybe if it's worth buying rugs to cover the bad parts up lol Can you just dye it?
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raeoflyte
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Post by raeoflyte on Dec 4, 2019 8:13:13 GMT -5
Carpet stains won't impact your appraisal. They're going to measure, snap a picture of each room and call it done if it's conventional. If you were selling, new carpet might get you a quicker offer but even then your appraisal wouldn't be higher.
If you're stressed about it (and I can't ever entirely follow my own advice and leave the house as-is either), buy rugs to cover the stains.
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justme
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Post by justme on Dec 4, 2019 8:22:27 GMT -5
Carpet stains won't impact your appraisal. They're going to measure, snap a picture of each room and call it done if it's conventional. If you were selling, new carpet might get you a quicker offer but even then your appraisal wouldn't be higher. If you're stressed about it (and I can't ever entirely follow my own advice and leave the house as-is either), buy rugs to cover the stains. Ok. I'm just recalling my last one where they subtracted a lot of costs from the comps. Can't remember if the carpets were one of em and haven't digged it up yet to see if they did.
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justme
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Post by justme on Dec 4, 2019 11:14:17 GMT -5
Carpet stains won't impact your appraisal. They're going to measure, snap a picture of each room and call it done if it's conventional. If you were selling, new carpet might get you a quicker offer but even then your appraisal wouldn't be higher. If you're stressed about it (and I can't ever entirely follow my own advice and leave the house as-is either), buy rugs to cover the stains. Hunted down my old one. You're right it didn't mention carpets. Just mentioned -5500 for condition. So I guess it won't be a big issue. Thanks. It was one thing that kept me from refinancing around 2 years ago to get rid of PMI and slightly lower interest rates when the prices were going up. Though now I'm glad I didn't do that!
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TheOtherMe
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Post by TheOtherMe on Dec 4, 2019 11:21:30 GMT -5
For my HELOC, the appraiser wasn't here even 5 minutes. He took no measurements on the inside. He did snap a few pictures. When I got a copy of the appraisal, he had taken pictures outside.
He might have been here for 10 minutes.
The only adjustment he made to the comps was a + because I have a gas fireplace.
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Post by Deleted on Dec 4, 2019 13:15:54 GMT -5
My appraisals have all been very quick measurements and looking for the "big" things. The comparisons were all on square footage and whether there was a garage or acreage. I think there was something about custom cabinets or high end things being in the house, but it probably doesn't amount to much.
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hoops902
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Post by hoops902 on Dec 4, 2019 13:19:44 GMT -5
An option you don't see? Sell it now. If you think you might move in a couple of years anyways, and you don't think you can get financing...there's an outstanding bill but presumably no lien yet? You might be better off selling now with a $30k bill in consideration coming to the buyer.
I'm not saying it's a great option, but I hadn't seen it mentioned.
Personally if the finance deal is literally that you'll pay the $11k in interest even if you sell it in a year, I'd find a way to pay it off now! Particularly if I thought leaving in a few years was an option (17 years is a LONG time to commit yourself to a home if you aren't 100% sure it's your final home...and probably a long time even if you do think you're sure).
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justme
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Post by justme on Dec 4, 2019 14:13:26 GMT -5
An option you don't see? Sell it now. If you think you might move in a couple of years anyways, and you don't think you can get financing...there's an outstanding bill but presumably no lien yet? You might be better off selling now with a $30k bill in consideration coming to the buyer. I'm not saying it's a great option, but I hadn't seen it mentioned. Personally if the finance deal is literally that you'll pay the $11k in interest even if you sell it in a year, I'd find a way to pay it off now! Particularly if I thought leaving in a few years was an option (17 years is a LONG time to commit yourself to a home if you aren't 100% sure it's your final home...and probably a long time even if you do think you're sure). Basically because it's not an option. I either have to hand over the cash on Feb 15 or I'm automatically enrolled in the payment option. Even if my condo was show-ready today (it's definitely not) there's no way I could sell it by then. Not to mention the last 2 weeks of December are pretty much not helpful as everyone's on vacation. So who knows how all that would work with the payment stuff. Also, even with the $200 payment plan issue the only way I'd be paying less for rent is maybe if I downsize or otherwise I'd have to move quite a bit away from where I am (and would also then increase my other costs like driving/parking/uber). I don't necessarily plan to sell in 2 years. Honestly, my plan whenever I move out of here is to rent it out if I can. But who knows what my plans are - I'm single and almost 34 so a lot could happen or a lot could not happen. Technically the HOA did not present it as interest (though I know they are having to get a loan). It was basically hey you owe 40 grand which we're letting you pay off over 17 years, but if you want to pay it all up front we'll give you a discount of 10 grand. I can't pay it off now unless I 1) take out of my 401k or 2) figure out some refinance/heloc/2nd mortgage/whatever deal.
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hoops902
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Post by hoops902 on Dec 4, 2019 14:27:53 GMT -5
An option you don't see? Sell it now. If you think you might move in a couple of years anyways, and you don't think you can get financing...there's an outstanding bill but presumably no lien yet? You might be better off selling now with a $30k bill in consideration coming to the buyer. I'm not saying it's a great option, but I hadn't seen it mentioned. Personally if the finance deal is literally that you'll pay the $11k in interest even if you sell it in a year, I'd find a way to pay it off now! Particularly if I thought leaving in a few years was an option (17 years is a LONG time to commit yourself to a home if you aren't 100% sure it's your final home...and probably a long time even if you do think you're sure). Basically because it's not an option. I either have to hand over the cash on Feb 15 or I'm automatically enrolled in the payment option. Even if my condo was show-ready today (it's definitely not) there's no way I could sell it by then. Not to mention the last 2 weeks of December are pretty much not helpful as everyone's on vacation. So who knows how all that would work with the payment stuff. Also, even with the $200 payment plan issue the only way I'd be paying less for rent is maybe if I downsize or otherwise I'd have to move quite a bit away from where I am (and would also then increase my other costs like driving/parking/uber). I don't necessarily plan to sell in 2 years. Honestly, my plan whenever I move out of here is to rent it out if I can. But who knows what my plans are - I'm single and almost 34 so a lot could happen or a lot could not happen. Technically the HOA did not present it as interest (though I know they are having to get a loan). It was basically hey you owe 40 grand which we're letting you pay off over 17 years, but if you want to pay it all up front we'll give you a discount of 10 grand. I can't pay it off now unless I 1) take out of my 401k or 2) figure out some refinance/heloc/2nd mortgage/whatever deal. I was actually thinking that maybe if you hadn't planned on selling in a few years to begin with, seeing this issue might be motivation to get the heck out of there. I wouldn't be pulling money out of my 401k for it (since conceivably as "interest" and no real intention of selling in the meantime, the money being earned is likely higher than the imputed interest paid)...but I'd certainly be looking for a refinance/heloc method to otherwise pay it off at a discount.
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haapai
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Post by haapai on Dec 4, 2019 14:31:35 GMT -5
Have you done the work and math to figure out what taking out a 401(k) loan would entail?
I'm generally bearish on 401(k) loans for multiple reasons but sometimes investigating the bad options in detail can push you to take actions that you would not otherwise have taken.
Does your 401(k) plan allow you to borrow? Will it allow you to borrow this much? What are the payback periods and interest rates? How would such a loan, if permitted, affect your paychecks? Will you be able to contribute to your 401(k) and/or receive a match if you take out such a loan? Could you afford to do so? Is repaying such a 401(k) loan ahead of schedule possible or is it such a PITA that doing so is unlikely?
The answers to these questions might be so dispiriting that HELOCs and personal loans start looking more palatable.
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