Financing Options
- Thread starter Kper
- Start date
Do you have a Home Equity line of credit? Can you get one?
The rate on mine is just 2.5% and I have almost quarter million sitting there in the bank anytime I want to write a check (with no obligation to use any of it). I have a small balance on it now so my interest payments are next to nothing. I can't find any downside (except that if Sue wanted to run off with a big wad of cash, it wouldn't be difficult for her to do) and any interest I pay is deductible as interest on our primary residence. You write a check for the 10 grand and that's it, no separate collateral or need for any proof of insurance or anything else that might be necessary for a boat loan.
If you can use your home equity, I see no reason to look for a boat loan. I'd use mine right now for a nice large brand new boat, but the trouble I'd be in probably isn't worth it!
The rate on mine is just 2.5% and I have almost quarter million sitting there in the bank anytime I want to write a check (with no obligation to use any of it). I have a small balance on it now so my interest payments are next to nothing. I can't find any downside (except that if Sue wanted to run off with a big wad of cash, it wouldn't be difficult for her to do) and any interest I pay is deductible as interest on our primary residence. You write a check for the 10 grand and that's it, no separate collateral or need for any proof of insurance or anything else that might be necessary for a boat loan.
If you can use your home equity, I see no reason to look for a boat loan. I'd use mine right now for a nice large brand new boat, but the trouble I'd be in probably isn't worth it!
Hey, I've got a home equity loan. How about I finance it for you, you keep it down here, i'll take care of it and make sure she's seaworthy every day, you come down and use it whenever you want. I'll charge you a very fair interest rate ;-)
How can I pass that up?! I have sailing friends warning me... "The best boat to sail on is somebody else's" and I've had plenty of offers but must be hard of hearing! About that equity LOC, that is something I'm going to avoid for several reasons that can get quite lengthy if explained. I hate big banks and find the CU's much easier to deal with anyway and it's only 2% higher. I can still claim it as a second residence from what I hear - something new to us.
2nd home ...
Well, you can probably claim it as a second home and the IRS may not track you down (unless you joined the TEA Party
) but I think you can't technically call it a 2nd home if you don't follow the appropriate rules. How would you call a Catalina 25 a 2nd home? The deduction from the interest on a small loan like that isn't really going to be meaningful anyway.
But why the reluctance? I don't know how you define a "big" bank, but you can get a HELOC from a small bank, too. You can go to the place where you have your mortgage so you can deal with the same people. I have the mortgage and HELOC with one regional bank and they are fine. I initially used a very small amount of the balance for home improvement and it was such a relief. There is no need to load up credit cards and pay 12-18% interest and worry about bumping up against the limit. I was able to do what I wanted at home and now have a large balance that I can access for any purpose. For me it has provided total relief from any worry about being able to access money if I need it.
If you don't have a mortgage, then better still, you have equity to access. I agree with people who don't want to offer their home as collateral if they are afraid they can't pay the bills, but if your home is already collateral then what difference does it make?
Hell, the interest rates are so ridiculously low (I have 3.25% for a 15 year fixed rate mortgage and 2.5% adjustable for HELOC) that the actual interest is so low that it barely even serves as a tax deduction.
The freedom to do with the money as you wish, and the freedom of not having the money tied to the boat is such an advantage. Interest rates are sooo low now, it is a good time to borrow on home equity.
Well, you can probably claim it as a second home and the IRS may not track you down (unless you joined the TEA Party
) but I think you can't technically call it a 2nd home if you don't follow the appropriate rules. How would you call a Catalina 25 a 2nd home? The deduction from the interest on a small loan like that isn't really going to be meaningful anyway.But why the reluctance? I don't know how you define a "big" bank, but you can get a HELOC from a small bank, too. You can go to the place where you have your mortgage so you can deal with the same people. I have the mortgage and HELOC with one regional bank and they are fine. I initially used a very small amount of the balance for home improvement and it was such a relief. There is no need to load up credit cards and pay 12-18% interest and worry about bumping up against the limit. I was able to do what I wanted at home and now have a large balance that I can access for any purpose. For me it has provided total relief from any worry about being able to access money if I need it.
If you don't have a mortgage, then better still, you have equity to access. I agree with people who don't want to offer their home as collateral if they are afraid they can't pay the bills, but if your home is already collateral then what difference does it make?
Hell, the interest rates are so ridiculously low (I have 3.25% for a 15 year fixed rate mortgage and 2.5% adjustable for HELOC) that the actual interest is so low that it barely even serves as a tax deduction.
The freedom to do with the money as you wish, and the freedom of not having the money tied to the boat is such an advantage. Interest rates are sooo low now, it is a good time to borrow on home equity.
If you let the boat stand by itself with its own financing then you may have the availability of a Home Equity Line of Credit for emergencies and future opportunities. It is OK to purchase a car, a motorcycle or a boat with a HELOC as long as you turn around and get a corresponding term loan and pay off the balance to restore the availability. The pitfall of HELOCS is that it is to easy to just pay interest and defer principal reductions. Ever hear the story of someone that is now making payments on a car that they no longer own. To me the largest advantage that a HELOC offers is having available money that you can easily access. Any portion of that line that is being used is no longer immediately available. Peace of mind does have a price.
Kper,
I have not used SunTrust for a boat. I felt some needed to answer your original post.
I have friends that have, but that was in the low 6 figures. I have used them for non marine financing in the past with positive results.
Good luck,
Steve
I have not used SunTrust for a boat. I felt some needed to answer your original post.
I have friends that have, but that was in the low 6 figures. I have used them for non marine financing in the past with positive results.
Good luck,
Steve
True, I guess Kper said something about wanting "options". To me, it doesn't make sense to attempt to find a "boat loan" for such a small amount. That's probably why he is finding that a boat loan isn't an available option. He mentioned wanting more "options" than a CU would provide. I'm not sure what that means. Don't you just want the easiest source of money at a low rate? You could put the amount on a credit card, but obviously, the interest rate would make you sick. That's why I say the heloc is a logical source.
How do boat loans work when you want (or have) to sell the boat? You have to pay off the loan upon sale, no? What if he can't sell it for the balance of the loan? He has to come up with the difference and put himself in the hole. Better to have the title of the boat free and clear, I say.
Kper, you just have to please yourself! Where are you sailing her? My brother lives about a block from Saylorville Res in Polk City ... we're both ISU grads.
I'm looking forward to the Cylcones vs UConn in the Garden tonight! I would need to tap into my HELOC for 2 tickets .... $3K per on the floor. OUCH! He balked at flying out for the game.
I'm looking forward to the Cylcones vs UConn in the Garden tonight! I would need to tap into my HELOC for 2 tickets .... $3K per on the floor. OUCH! He balked at flying out for the game.
We'll have her on Red Rock since we live about a quarter mile from the lake and 5 minutes from the marina. We wanted something we could keep indoors on a trailer for the winter with a fixed keel. Obviously these weren't the only items on our wish list when we started looking but when we looked at it we were pleasantly surprised at how clean and well cared for it appeared to be. After giving it a look over I discovered the Mrs had everything checked off her list - something I didn't think we'd find so soon after starting our search. We're still learning and this seems about right.
I didn't realize I still had the Catalina listed in my profile until you mentioned it.
Your brother may have a heck of a time commuting this summer since they are closing the mile-long bridge over Saylorville. Does he have a boat on the lake? As far as the IA State / CT game... Iowa better win - we have a whole dollar riding on the sweet 16!
I didn't realize I still had the Catalina listed in my profile until you mentioned it.
Your brother may have a heck of a time commuting this summer since they are closing the mile-long bridge over Saylorville. Does he have a boat on the lake? As far as the IA State / CT game... Iowa better win - we have a whole dollar riding on the sweet 16!
Nope, Tom lives at the south end and works in Des Moines. He's semi-retired and they have a home in Hayward, Wisc where they spend most of their time.
Too bad for the loss, I'm disappointed. I noticed an ISU band member clapping for the UConn players as they were leaving the floor. It made me smile ... I'm not from Iowa and I only lived in the state for 6 years while I got 2 degrees. It didn't take me half that long to recognize there are no better people anywhere in the country than the folks from Iowa. I loved going to school there. It's funny, I weep like a baby whenever I see "Field of Dreams" ... "Ray, is this Heaven? ... no, it's Iowa"
Too bad for the loss, I'm disappointed. I noticed an ISU band member clapping for the UConn players as they were leaving the floor. It made me smile ... I'm not from Iowa and I only lived in the state for 6 years while I got 2 degrees. It didn't take me half that long to recognize there are no better people anywhere in the country than the folks from Iowa. I loved going to school there. It's funny, I weep like a baby whenever I see "Field of Dreams" ... "Ray, is this Heaven? ... no, it's Iowa"
My wife and I both have family that started in Iowa and left in the late 50's. Ironically she and I were the only two to move back. We've lived in Europe and in half a dozen states... Iowa is where we've decided to stay. I'm sure there must be similar places elsewhere but we like it here.