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Heloc
Old 02-23-2020, 01:42 PM   #1
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Heloc

I vaguely remember a thread from last year. The part-time gig ends in May, so I've considered applying for a HELOC, in part out of a vague memory (and perhaps inaccurate) that home equity loans including HELOCs are difficult to qualify for after wage income ends.
I'm of several minds on this, since I doubt we would have much need for one, particularly after two years from now when I will be able to also tap DW's IRAs. I could see the need at the end of the year for bridge money to avoid selling funds in the brokerage account or for emergency cash needs for the DSs, although they both are independent.
Bank of America apparently has a low/no fee HELOC, with I think a minimum loan of 25k, so I've been thinking over the pros/cons (including whether it's worth the trouble); the no yearly fee is attractive. I am troubled by what I heard on the previous threat of the Great Recession, in which banks pulled back availability of equity loans.

Our house in Reno is paid for and has gone up in value to about 480k or so. I'm limited to 3 withdrawals per year from my 403b, although I don't see that as much of an issue since I take the yearly withdrawal at the beginning of the year (it can take 2-3 weeks to withdraw money however). And again, the brokerage fund has a bit over 100k, with money available in about 3 days after selling a fund. So a HELOC might be an over-abundance of caution.
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Old 02-23-2020, 02:51 PM   #2
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I would suggest getting one. They amount to a free option. If you don't need it, you don't use it. Shop around for a better deal. If you qualify for Navy Federal membership, they have good pricing and terms with no fees or required draw. I have read good things about Third Federal as well. Pen Fed used to be my go-to, but they seem to have revamped their offering to one less attractive than it used to be.
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Old 02-23-2020, 02:59 PM   #3
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We lined up a HELOC last year. It wasn't trivial, but wasn't hard even though we don't have any "income".

What helped is that we have income according to the IRS. It's funny, but ROTH conversions are helpful in qualifying since it's "income".

Now it's sitting there for us to use if we need it (we're doing some renovations on a lake house and so it might very well be useful as a bridge - the reason we got it).

We did this through Huntington Bank - no fees and low rates. They even gave us a larger line of credit than we expected after the appraisal.

It can't hurt to try.
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Old 02-23-2020, 05:37 PM   #4
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Quote:
Originally Posted by brewer12345 View Post
I would suggest getting one. They amount to a free option. If you don't need it, you don't use it. Shop around for a better deal.
+1 - I think this is the simplest way to mitigate sequence of return risk
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