Fire Up The Calculator

I’m giving some fair consideration to the idea of buying the house in cash with a personal loan and then paying off that loan with a home equity loan.  That gets me around whatever issues a mortgager has with the condition of the house.  Yeah, screw mortgages.

So then, let’s do some rough math.  A personal loan has an APR of about 9% and a max term of… ohhhh… 5 years.  I need to borrow \$38k, and that works out to a payment of about \$800/mo.  Holy shit.  I could handle that for a few months, but not for very long.  Ok, assuming I can stomach that, a home equity loan has an APR of about 6% for a max of 15 years.  That’s a payment of \$322/mo.  That’s nothing like my original budget of \$181/mo for 30 years at 4%.  But between that and nothing at all, it’s a viable option.

Now for some finer math.  My initial numbers were still working with the amount I would finance if I put 20% down, which was \$9,500.  With a war chest of \$24k, that left \$14,500 left for repairs, insurance, etc.  If I pull out an extra \$4k and borrow \$34k, that makes the personal loan \$700/mo and the home equity loan \$288/mo.  Then I have \$10k remaining for repairs and updates.  That’s an even more viable scenario.

The war chest is growing by about \$600/mo, which will put me in a deficit as long as I have the personal loan going.  I do have other funds that can make that up, but I want to try and keep this as safe as possible.  I would hope to be able to get the home equity loan within 6 months, so that would be \$600 gone from the war chest in the time I maintain the personal loan.

There’s one unknown issue at this point: the roof.  If the roof needs replaced, that would destroy my savings entirely.  However, this is dry season and many months until next hurricane season.  And who knows, by then, my housing situation may be 1000% different.

I think I’ll be stopping at my bank during lunch break.