My wife would like to remodel the house we are in. I'd like suggestions on the best way to pay for it.
We are both in our mid 60's. Wife is retired and I will be in a few weeks. Wife has pension and SS. I have no pension and will start collecting SS in 2-3.5 years. We have income producing real estate as well as 9 years left on a 10 year note paying me for my share of the business I sold. Along with the small amount of dividends from our taxable brokerage account, all of the above covers our normal monthly expenses at our current lifestyle including the payments on the debt below.
The real estate income is pretty secure for the next decade, but you never know. The value of the properties being rented is about $2 Mil total.
Debt:
Home mortgage: $97,500 @ 4.875%. Will be paid off in 5 yrs, 7mo
Boat (yeah, it is a personal issue): $128,300 @ 5%, Due to accelerating payments will be paid off in 5 yrs, 2mo.
Loan on a real estate partnership: $211,600 @ 5.75% will be paid off in 3 yrs, 7mo. (only half of this is mine as it is in a partnership)
Investments:
Cash: $16,000
Taxable brokerage account: $822,000 , $29k is in cash equivalents the rest is in index ETFs with LTCGs.
Roth IRAs: $611,700
tIRA: $1,205,000
HSA: $112,000
So finally the question. What would be the "best" way to pay for a $200k-$300k renovation on the house? Likely we would be in the house for 5-10 years. HCOL area. We could pay for it with cash if we took a big hunk of our taxable account. It is generating about $15k of income a year in dividends so that is income that we would need to replace as well. Not sure of lending rates, but we could take out a loan. The interest is likely to be significantly higher than my expected ROI on my accounts, but until I hit 70 and start QCD's I could deduct the interest on a home improvement loan.
Any suggestions?
We are both in our mid 60's. Wife is retired and I will be in a few weeks. Wife has pension and SS. I have no pension and will start collecting SS in 2-3.5 years. We have income producing real estate as well as 9 years left on a 10 year note paying me for my share of the business I sold. Along with the small amount of dividends from our taxable brokerage account, all of the above covers our normal monthly expenses at our current lifestyle including the payments on the debt below.
The real estate income is pretty secure for the next decade, but you never know. The value of the properties being rented is about $2 Mil total.
Debt:
Home mortgage: $97,500 @ 4.875%. Will be paid off in 5 yrs, 7mo
Boat (yeah, it is a personal issue): $128,300 @ 5%, Due to accelerating payments will be paid off in 5 yrs, 2mo.
Loan on a real estate partnership: $211,600 @ 5.75% will be paid off in 3 yrs, 7mo. (only half of this is mine as it is in a partnership)
Investments:
Cash: $16,000
Taxable brokerage account: $822,000 , $29k is in cash equivalents the rest is in index ETFs with LTCGs.
Roth IRAs: $611,700
tIRA: $1,205,000
HSA: $112,000
So finally the question. What would be the "best" way to pay for a $200k-$300k renovation on the house? Likely we would be in the house for 5-10 years. HCOL area. We could pay for it with cash if we took a big hunk of our taxable account. It is generating about $15k of income a year in dividends so that is income that we would need to replace as well. Not sure of lending rates, but we could take out a loan. The interest is likely to be significantly higher than my expected ROI on my accounts, but until I hit 70 and start QCD's I could deduct the interest on a home improvement loan.
Any suggestions?
Statistics: Posted by WeakOldGuy — Mon Nov 25, 2024 12:46 am — Replies 5 — Views 294