Should Knoxville use a higher-interest Home Equity Loan (HELOC) to pay off a lower-interest 401k loan?
Joelle’s tenant is interested in a rent-to-own agreement. Is this a good idea from a landlord’s perspective?
A recent wildfire shifted Sharon’s house into a flood zone. Should she sell before FEMA redraws the map and it becomes official?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
P.S. Got a question? Leave it here.
Here are the details:
Knoxville asks (at 01:29 minutes): Does it make sense to use a Home Equity Line of Credit (HELOC) with an 8 percent interest rate to pay off a 401k loan with a 5.25 percent interest rate?
My goal is to maximize the return on my 401k while using the HELOC on my primary residence to chip away at debt repayment.
I bought an out-of-state investment property using a $50,000 401k loan. It’s on a 30-year mortgage with a 7 percent interest rate.
My primary residence has $615,000 of equity and is on a 15-year mortgage with a 2 percent interest rate.
I make $230,000 per year at my full-time job. I also have a flexible freelance job that brings in an additional $10,000 to $40,000.
I’ve saved $410,000 for retirement and my company offers a 7 percent 401k match.
I have no credit card debt, and I’m halfway toward fully funding my emergency fund.
Joelle asks (at 20:22 minutes): What’re the pros and cons of a rent-to-own contract from a landlord’s perspective?
I inherited a paid-off home with a great tenant who’s interested in buying.
I’ve done research on lease options. However, most resources address the issues from a tenant’s perspective and not the landlord’s.
Some questions I have are:
- I’ve heard that rent-to-own is “ideal”, but I don’t understand why or for whom.
- How does a rent-to-own contract work?
- What’s the difference between a lease option and a lease purchase?
- How do I choose a timeline for the agreement?
- Once the tenant has fulfilled his down payment, do they apply for a traditional mortgage towards the balance of the house?
- Why would property owners want to offer a rent-to-own option?
Sharon asks (at 34:55 minutes): Should we sell our home before the FEMA flood designation on our neighborhood changes?
We’ve owned our house in Flagstaff, Arizona for 10 years without any flooding issues.
But a recent wildfire compromised the watershed and we’ve experienced flash flooding four times in the last two years.
There’s an effort to restore the watershed, but that could take a long time. Meanwhile, when the area gets remapped, our house will sit within a FEMA-designated flood zone.
What do I need to know about being in a flood zone, and how does this compromise the value of our largest asset?
Should we sell before this map amendment happens?
The challenge is that we’d now be priced out of our local market. We’d have to move out of the city we love.
How do we decide between a house that’s perfect for us now and avoiding the potential threat of environmental catastrophe?
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