I did something I never thought I’d ever do.  I applied for a home equity loan.  After lots of research, it just seems to be the best option for us.  In 2011 I bought a 1970′s foreclosure with an FHA 203K Rehab Loan; it was a complete nightmare, and also the reason I started this website.  One of the items on our to-do-list that never got done, is our kitchen.  This sexy beast…

Yeahhh.  The sub-floor is caving in, there is severe water damage beneath the kitchen sink, and we believe there is a mold issue in the walls.  (Here’s the kitchen intro from 2011.)  Considering my son was recently diagnosed with asthma, and has been having nonstop attacks for over three months, this is a serious issue we need to get taken care of.  We have a chunk of cash in savings and figured we’d use that towards the kitchen.  I checked out Lowes, and immediately ruled it out; $19,000.00!  Hmm, no.  Home Depot was the same.

Then I came across Ikea’s 20% off kitchen sale.  Usually you have to purchase 3 of their appliances to receive the discount, but this season it’s 20% off any kitchen purchase over $4500, no appliance purchase necessary.  Since we have no plans to replace our appliances, this was a good deal.  After playing around with a layout in their 3D kitchen designer program, the price list came to $5190 before the discount or tax.  After the discount, that’s $4152 for a new kitchen!  Granted it’s not all solid wood (doors are), but most of the online reviews are favorable.  The poor reviews always involved shoddy installation.

As I sat on the idea for the last two weeks, the idea of emptying our savings account began to make me nauseous.  I can’t do it, there had to be another way.  Credit cards were out of the question, the interest rates are too high, our limits are too low.  Then while my boss was discussing having his mortgage refinanced, it dawned on me to check out home equity loans.

The minimum listed was $10,000, that was plenty.  Then I found out that was only available for the HELOC (Home Equity Line of Credit), which I didn’t want (variable rates.)  The home equity loan minimum was $20,000, but offered a fixed rate that I’m more comfortable with.  I did the math and the monthly payment wasn’t bad, and I could use $7300 of it to pay off my car.  That would get rid of a $310/mo. car payment (at 11.09% omg) and stick me with a payment of $138 per month for 10 years.  (Although I’ll still pay more and pay it off much sooner.)  The interest rate is 2.9%.  Mathematically it makes sense.  Of course it’s still debt.  On my home.  But it feels like the right decision.  Our monthly expenses will lower and I’m another step closer to going part-time or quitting.  Now I’m waiting to be contacted by a loan officer to collect the financial documents to close on this loan.  I hope it goes quickly and smoothly, because the Ikea sale ends April 28th!

We have contractors coming to the house this weekend to provide quotes on removing a wall, repairing the drywall/ceiling, moving electrical and plumbing.  They’re friends of ours, so it shouldn’t be too bad.  I’ll take that, add it to the Ikea quote, then get a flooring quote, and I’ll have a better number to play with.  I want to stay under $10,000 for the entire kitchen, use $7300 for the car, and the remaining $2700 I’ll just use to pay back towards the loan.

I’m sure this is one big fat no-no in the PF world, but sometimes you gotta do what you gotta do.  Sorry guys, we’re not a six figure family, sometimes debt happens.  Honestly, the goal is to repair the damage, and have a healthier environment in the house, not get a fancy kitchen.   Anyone have any experience with a home equity loan or HELOC?  I’d be curious to know your experience.