Trying to Be Smart
January 12, 2013 11:16 AM Subscribe
Unusual combination of pending unemployment, upcoming (home equity and car) loan needs and a long boat ride requires the mefi thinktank for logistical scenarios and a bit of education about said loans. We are looking for the smartest approach to the coming year and could use more brains in the mix.
posted by anonymous to Work & Money (7 answers total) 2 users marked this as a favorite
• Our full-time jobs are ending simultaneously in two months (all income will stop, unemployment is unlikely and we will owe $400/mo for the high-deductible health plan);
• We are in a (currently) decent financial position with about $30k liquid;
• We have a lot of equity in our home (we do not currently live there; mortgage paid monthly by renters);
• We face about $40k worth of critical home maintenance projects that contractors will do in the spring (waiting is not an option);
• We need to replace two unreliable (though paid for) vehicles with one new-ish and dependable vehicle (perhaps $20k);
• We have excellent credit.
The unusual part:
After our jobs end, we expect to be moving/traveling on a boat for six months, after which we will stop and search for work and need a dependable vehicle and an inexpensive rental for a couple of years. Because we know what is around the bend, we are thinking we need to apply NOW for a home equity loan for the home maintenance projects and a vehicle loan for the car BEFORE our jobs end in a couple of months or else we won't qualify. Of course the prospect of acquiring new debt is a bit daunting in the face of unemployment, but we feel fairly confident in our ability to cover our expenses and to find at least enough work to pay the bills before our savings runs dangerously low.
Is it ever possible to get a car loan and not actually make the purchase for six months? (If we buy the car now, we’ll have to store it for the summer, fly back to get it and then drive it 2,500 miles--pros: it can hold a bunch of our stuff and could be an adventure, cons: the cost of the flights back, plus all that gas, food and lodging while unemployed--and winter will be upon us). Is there any sort of dealer program that permits buying a car (at our destination) but not picking it up for six months? That just doesn't seem wise... or is it at all likely we'd qualify for an auto loan after being unemployed for six months? (Could we use the equity in our home as collateral? If so, would this affect the interest rate?).
We have never experienced the intricacies of home equity loans or lines of credit. We have just our one home, but we don’t live in it right now. Where is the best sort of place to start looking for a loan to cover the $40k in home maintenance projects? (credit union, local bank, internet?). Is there any way to avoid the higher rate that seems typical for non-owner-occupied homes? (Any argument to be made, for instance, that this is our only home and not your typical income property?). Is there any way or reason to combine the home and auto loans? and would we even want to if we could? (I see home equity loans around 6% and cars at 3%, so there’s an obvious drawback…). Are there better or other kinds of loans to be had if we’ve paid more than 80% of our mortgage?
Now a question that probably shows I have no idea what I'm talking about: If we have just $40k left on the note of our home (at a rate that won't get any lower), is there anything to consider around refinancing, with all above in mind, that would address these concerns?
Any other thoughts or ideas?