How should I pay for my new roof?

Q. I have recently discovered that I need a new roof on my small home. Estimates are coming in around $6,000 and I don’t have a liquid $6,000.  I have an IRA and a 403B rollover, each with approximately $6,000, but I don’t think I can take any money out of these accounts without a penalty. Is there a better option between a home equity loan, a home equity line of credit, or simply spreading the $6,000 across my two credit cards?  I’m not fully clear on the definition of home equity, but I think that I have a sufficient amount of equity as my home is valued at $160,000 and I only owe about $40,000 on it.  Any advice?

A. Don't cash in your retirement accounts. You would owe income taxes on the money plus a 10% penalty if you are younger than 59 1/2.

Home equity is simply the value of your home minus the amount of your mortgage. You have equity available and a home repair or improvement is the most legitimate use of home equity. The general rule is that a home equity loan is best when you have a single expense you'll be paying for in a lump sum--your roof repair is a perfect example. A home equity credit line is best when you'll be borrowing at various times. A credit line is often more convenient but it has a couple of drawbacks. One is that the interest rate is adjustable and could go up. The other is that it makes it very tempting to spend more than you originally intended until you have maxed out your credit line.

A credit card is the best option only if you've been offered a low rate that's locked in for a while. A "teaser" rate good for just a few months is worthless unless you think you can pay off the loan very quickly.

Comments

[m. Smith]

Hi Helen,
First of all I would like to thank you for all of your hard
work bringing us up to date on all things Lou. You are a
gifted reporter and fabulous journalist.
Now that we know that there is a book being written, let's
address the movie. I have heard rumors that there is a producer
named Laura Dunn in Los Angeles who owns the life rights and
is doing a theatrical release major motion picture. Do you or any of your
bloggers know anything about this? Do you know who is going play Lou?
Does anyone know when the movie is coming out?

[jerry cummings]

We replaced our last year, Our Roofing contractor got a deal for us through a finance company that he works with.
It was six months, same as cash,it worked out for us,it might be something to look into.

[DOCTOR PETER TEIMAN FRANKLIN]

DOCTOR PETER TEIMAN FRANKLIN here,
You pay for a new roof with trepidation, given the amount of problems thereafter.
DR PETER TEIMAN FRANKLIN
Sweden