Pull 2nd mortgage for steel building???

[BD1]

when I was younger I wanted. A old guy told me that you have to separate your "wants" from your "needs". You can;t spend what you don't have.
You never said what your occupation is or age. How stable is your job ? Kids at home or in college ? All parts of the puzzle .
If you have the money do it. Why take a loan out and pay someone for their money when you have your own ? Unless, you invest so well that you make more than what you would be paying. I guess if you made that much you would not be asking about borrowing.

 

[93L#3008]

To build my garage I'm refi-ing our whole property and pulling 15k out in equity for the garage. The house will be paid for in the same amount of time and it is only costing me an additional $50/month (until my tax assessment gets jacked).

I would have loved to waited and paid cash, but I have no garage and no decent storage for all the outdoor stuff and tools we have. I'm really tired of laying outside working on my stuff in the elements, too.

It was either this or move for me. Moving to a place with the shop I want would cost me a lot more $$.

I agree
You only live once and life is short... refinance your first mortgage and roll it into one payment. May cost you less than 100 extra per month and you can always pay more than your actual payment reducing the interest you will pay.
Knew a guy that saved and busted *** to retire in his fifties and build his perfect garage. Dropped over dead shortly after retiring and before the shop was built. He couldve had it built 15 yrs ago and enjoyed it.

 

[93L#3008]

All garage journal users are loaded????

Start a post your salary thread....

 

[LutzTD]

All garage journal users are loaded????

Start a post your salary thread....

depends, is it what we make or what we tell the government?

I waited until I was 45 to start my second big shop, mostly because of travelling for the job and several reloctaions. My first shop I built I never got to use and ended up being an expensive storage facility, although at storage prices it likely has paid for itself a couple times over. All the while I was out of town I salted away garage money and on accasion picked up a great machine for a song. If I were in a more location stable job, I would have borrowed and built 10 years ago, as it is I have a lot of the filler needed so I will have a noce shop. My first shop was way too small. Im guessing your 30 and I dont know what your capabilities are but get the shop, you will be 15 years filling it with equipment but at least you can enjoy working out of the weather and getting it all the way you like. If you feel you are stable where you are and you plan it well I say go for it. Build 2X what you think you need or design it to be expanded.

 

[GarageEnvy]

I know I've answered this before but I will say there are no absolute right answers. Second mortgages cost more because they're in second place and would have to cure the first to protect their position in a default. So it's rarely the cheapest alternative. However, the cash out refinance is harder to come by these days so that might be an issue for you. There's good debt and bad debt. Good debt results in positive leverage or at least minimizes the net outlay after taxes. In my case I make first trust deed loans at 8% to 11% and I can borrow money at 4.75%. So when I went to build my garage I paid half in cash and half with a HELOC. Now less than two years later it's paid off. I did that largely with the money people were paying me from loans I had made. Yes, it still cost me but it's an option for some.

If you're financing something that will appreciate or that adds to the value of the house some people will factor that into the equation. I don't because I don't have plans of realizing the gain. Would I ever finance a depreciating asset? Probably not, but that's just me.

The reason a HELOC was available to me was because my wife and I made a commitment to pay off our first. By doing our own lawns, not going out to eat, taking on extra work and putting that money toward paying off the mortgage, we were able to pay off a 30 year loan in 9 years. So my bias is "anti-debt" but I realize there are situations when it can work to your advantage.

 

[Frank The Plumber]

The environment is not good to be borrowing money on your home. I have never paid much interest. I win.

 

[DoyleDee]

you only live once.... do what you want to do..
You will make your life what you want out of it!
I am "younger" and have been very fortunate in life, but I am also a very hard worker.
I have helped build several houses, out buildings and my fathers shop- I also built my shop... my life is fairly well debt free and that is the way I like it.. I made it that way!

 

[Daedalus]

I agree
You only live once and life is short... refinance your first mortgage and roll it into one payment. May cost you less than 100 extra per month and you can always pay more than your actual payment reducing the interest you will pay.
Knew a guy that saved and busted *** to retire in his fifties and build his perfect garage. Dropped over dead shortly after retiring and before the shop was built. He couldve had it built 15 yrs ago and enjoyed it.

+1 here too. What's the point of paying cash and staying debt-free if you're 80? Be responsible and thoughtful, but don't let it become a black-or-white issue.

You could buy a house with a nice garage and pay more for it. Or pay less for a house without a garage and have one built. What's the difference? You pay a bit more in interest rate but you get to build your shop. Your state is non-recourse either way you say.

 

[Jack Olsen]

That interest rate number makes borrowing money seem as though you're paying, what, three pennies on each dollar you borrow? Well, the more important number is how that interest rate plays out -- on how much you're actually going to have to pay the bank back. If you finance $50,000 for 30 years at the low, low rate of 3.2%, you'll be paying $77,844.04 back to the bank by the time the loan is paid off.

That's a pretty good deal for the bank.

 

[jpinca]

I agree there was too little info to give meaningful advise, though I doubt anyone wants to provide that sort of info on a public forum anyway.

Some people hate any debt, so it makes no sense for them to take discretionary debt- they would just be miserable the whole time. You're obviously not one of those people or you wouldn't have asked the question.

There are times then debt makes sense, even if you have the cash. Firsts can be had for 3.85% right now and the inflation rate is between 2-3% (depending upon the source of the info). Coupled with possible tax benefits, you may end up paying less in real buying power than you borrowed. Investing the cash (assuming you have it in the first place) rather than tying it up can make the whole thing cash flow positive.

On a personal note, my dad had zero debt my whole life and saved like mad, deferring many things he wanted to do. He died just after retirement and never really got to enjoy the fruits of his labor.

Again, there are no black and white answers and your situation is totally unique. I will say that having little to no debt FEELS better, regardless of the math, but I guess that's just the irrational natural of the human beast.

 

[the lone]

Hmmmm ............ you're making $800 a month cash back? So you're spending somewhere around $16,000 a month on a Discover card? (5% of 16,000 is 800).

If that's the case, I thiink you're pretty well off financially and sure don't need a second mortgage.

sorry, i meant 800 a year cash back

 

[the lone]

when I was younger I wanted. A old guy told me that you have to separate your "wants" from your "needs". You can;t spend what you don't have.
You never said what your occupation is or age. How stable is your job ? Kids at home or in college ? All parts of the puzzle .
If you have the money do it. Why take a loan out and pay someone for their money when you have your own ? Unless, you invest so well that you make more than what you would be paying. I guess if you made that much you would not be asking about borrowing.

im 32. i work in healthcare for 12yrs and am a state employee. i just put 20% down on a house and walked into about an extra 15k plus the 20% i put down. this place is the end of the road for me. i plan to retire here, and retire at my state job. i know how people feel about debt. seems like some people on here get upset that you question their advice. true i did ask for advice, but i was taught to never take advice from unproductive people. im simply looking for suggestions, from people who have been in my similar situation. not the grandpa "if you cant pay cash you cant afford it" theory. i agree with what alot of people are saying on here, some people said it took 5 yrs to build their shop. thats way too long for me. i dont have the patience lol. i guess i should have asked does building a shop increase property value, or has anyone had any luck getting more money for their place if they sold it, with the addition of a shop on the property. not that i plan to sell, (i just stated i plan to retire here) borrowing on a 2nd mortgage is sort of like spending your own money (to me atleast) with 1 small thing called interest, as stated earlier interest vs convenience is more the question. some folks said they borrowed against 401k to build a shop. to me (my opinion) that is worse than getting a 2nd mortgage....you are basically putting your retirement on the line, in exchange for a garage, vs. putting a house on the line in an exchange for a garage (you can always get another house). this topic can go on and on with opinion. it was stated that i asked a question, and when people give advice i argue. not true. i dont make a whole lot of money. for me to save up 30k cash would take a couple years of saving and not doing anything but saving. but i do have excellent credit (over 800) and stable job (not that any job is stone right now) so i can make the payment. just looking for suggestions in similar situations. sorry for the rant lol

 

[the lone]

depends, is it what we make or what we tell the government?

I waited until I was 45 to start my second big shop, mostly because of travelling for the job and several reloctaions. My first shop I built I never got to use and ended up being an expensive storage facility, although at storage prices it likely has paid for itself a couple times over. All the while I was out of town I salted away garage money and on accasion picked up a great machine for a song. If I were in a more location stable job, I would have borrowed and built 10 years ago, as it is I have a lot of the filler needed so I will have a noce shop. My first shop was way too small. Im guessing your 30 and I dont know what your capabilities are but get the shop, you will be 15 years filling it with equipment but at least you can enjoy working out of the weather and getting it all the way you like. If you feel you are stable where you are and you plan it well I say go for it. Build 2X what you think you need or design it to be expanded.

thanks for the response.

 

[the lone]

I agree
You only live once and life is short... refinance your first mortgage and roll it into one payment. May cost you less than 100 extra per month and you can always pay more than your actual payment reducing the interest you will pay.
Knew a guy that saved and busted *** to retire in his fifties and build his perfect garage. Dropped over dead shortly after retiring and before the shop was built. He couldve had it built 15 yrs ago and enjoyed it.

sad but true. my old co worker worked his *** off til he was 65. saving saving saving......3 months after he left the job he had a stroke. so sad.

 

[the lone]

That interest rate number makes borrowing money seem as though you're paying, what, three pennies on each dollar you borrow? Well, the more important number is how that interest rate plays out -- on how much you're actually going to have to pay the bank back. If you finance $50,000 for 30 years at the low, low rate of 3.2%, you'll be paying $77,844.04 back to the bank by the time the loan is paid off.

That's a pretty good deal for the bank.

id never borrow anything for 30 yrs...i heard a commercial on the radio yesterday that costco or some other wholesale warehouse is going to start doing home mortgage? they had a testimonial on here , dude said he went from 800 a month 15yr loan and they were able to reduce is payment by 200 dollars on a 30yr fixed rate.......how many people fall for that?

 

[larry_g]

I look at it this way. You said that the building would be 90% play and 10% profit making. If you can generate enough money out of the shop then go for it. If you have some junk that is unsightly and want to cover then it makes no sense to borrow money to do so.

lg
no neat sig line

 

[6768rogues]

I haven't borrowed so much as a dime in 20 years. If I don't have the money to pay for it, I go without it. To me, interest is wasted money.

 

[CreekRat]

You have no clue what any of us make on here dude.

I by no means am rich. It's called living within your means, planning, and delayed gratification. Something most of this younger generation know nothing about.

There is absolutely no cause to attack those that have saved and spent their money wisely.

Bazinga! Ya got me dude.

When someone advises whipping out the checkbook for a $10-$20k purchase any reasonable person has to assume they have they have some serious scratch laying around.

Whether they got that way from life of diligent, verdant savings or as a leader of a Mexican drug cartel the result is still out of the ordinary. As for the rest of the world, we use debt as a tool. It can be thrifty or expensive, the choice is up to the user.

In the last four years a regional builder has gone from advertising $6,900 to $11,000 for a 30x40 building. If you started saving $1,500 a year for a garage back in 2008 you'd be chasing a moving target that you'll never hit but if you'd just bit the bullet and signed the papers you could have been enjoying the garage life all along and for years to come.

 

[71flh]

i dont do a 401k.

You need one of those more than a shop.

 

[Full Throttle]

I like using other peoples money.

I like living well within my means, lets not go overboard and just say ''within''

I would wrap it into your mortgage, not an addl payment, cuz when they take your house you still have to pay on the shop.

Man get a 401k, put 3% a week in till you get the feel, you will never know especially if you can do it before tax's. They are good things to have for small loans, you borrow your money and pay yorself interest back, kinda no brainer.

 

[WVBrady]

Second mortgages are never a good idea for anything. They were invented for pretentious people that want to live over their heads.

OR, to bond your son out of jail.

 

[93L#3008]

I like using other peoples money.

I like living well within my means, lets not go overboard and just say ''within''

I would wrap it into your mortgage, not an addl payment, cuz when they take your house you still have to pay on the shop.

Man get a 401k, put 3% a week in till you get the feel, you will never know especially if you can do it before tax's. They are good things to have for small loans, you borrow your money and pay yorself interest back, kinda no brainer.

You do have to pay interest plus you are missing out on the 8%-10% your investment may average in earnings. Borrowing from 401k should be last resort.... And most employers require you to pay it back in full when you get fired, laid off or resign.

 

[johndoe123123]

Nobody could possibly give you advice without knowing your curent mortgage balance, your current home value and you credit rating. A second mortgae is a very general term and one may or may not make sense for you.

If you have a $400,000 house that you owe $200,000 on and want to spend $25,000 on a barn...then just refinance the current mortgage and take cash out. Or if the current mortgage is at a really good rate and you could pay off the barn fast then just take a line of credit against the house equity. If you have a $200,000 house and owe $195,000...then you aren't going to get more out of it. If you have a $200,000 house and owe $20,000...then maybe a second mortgage is a perfectly good idea. If it's a $30,000 house that you owe $15,000 on then I just don't know what to tell you about a $25,000 barn.

Of course some of us just refinanced a 150k house they owe 230k on.... ugh... At least it gets the rate down.

 

[Jarhead0408]

Man it got waaay to serious in here way to fast. Seems like alot of people think they got their toes stepped on. Cut and dried opinions are alright, but no need to get angry about it.

Side notes for you: Nice Impala, really like the wheel well covers, my Dad had a '66, wish he had kept it.

A 401k is a good thing to have, good tip is every 6-12 months increase your contribution by 1%, you'll never miss it. But also, I'd look into a Roth IRA from Vanguard, alot better return but stay away from the conventional IRA's.

Good luck to you either way with the shop, just take your time and weigh your options many times over.

 

[the lone]

You need one of those more than a shop.

im part of a state retirement i dont do 401k.

 

[the lone]

Man it got waaay to serious in here way to fast. Seems like alot of people think they got their toes stepped on. Cut and dried opinions are alright, but no need to get angry about it.

Side notes for you: Nice Impala, really like the wheel well covers, my Dad had a '66, wish he had kept it.

A 401k is a good thing to have, good tip is every 6-12 months increase your contribution by 1%, you'll never miss it. But also, I'd look into a Roth IRA from Vanguard, alot better return but stay away from the conventional IRA's.

Good luck to you either way with the shop, just take your time and weigh your options many times over.

thanks. i agree. everyone gets butthurt. thanks for compliments. they are actually 64 hubcaps. all i could find at the moment. i love the 62

 

[the lone]

OR, to bond your son out of jail.

lol yea i guess borrowing for a shop is better than this ^^^

 

[Full Throttle]

You do have to pay interest plus you are missing out on the 8%-10% your investment may average in earnings. Borrowing from 401k should be last resort.... And most employers require you to pay it back in full when you get fired, laid off or resign.

when I borrow from my 401 the interest I pay back goes to me so if it's at 4% I get that interest. I am fully vested in my 401 and so are my employer contributions, I could take my money, pay uncle Sam and run. I was using this as an example for small loans like $2K not $10k, yes you would loose out on alot of investment if you pulled 10k, I understand.

 

[CreekRat]

Another downside of the 401k loan is the typical repayment requirement if you leave the plan (termination).

Nevermind, 93L #3008 said the same thing and I missed it, sorry.

 

[DFW-LSX]

Here's a heartwarming second mortgage story for you .........

A guy I know married a somewhat younger woman. The day after the wedding, she turned into a *****. She said she wanted a bigger house. He said he couldn't afford it. She said she didn't care, borrow the money.

He did.

Months later, she said she wanted a bunch of new clothing, jewelry, furniture and a new SUV. He said they couldn't afford it. She said she didn't care, borrow it.

He did and took out a second mortgage.

After a few years, she files for divorce, gets all the stuff that he's paying for and has her new boyfriend move in.


The End.

The dude sounds like a ******* that got what he deserved.

OR, to bond your son out of jail.

Ha...never happen, mine would sit there

OP only you know the whole situation so do what you think is best, maybe the shop will add enough value to the property to make it worth it in the end.

 

[the lone]

thanks DFW. and i also am not putting my house on the line to bond anyone out of jail lol. i might help with cash to post bond, but if they did something that requires a 20k down, they can sit there.

 

[Jarhead0408]

I will disagree with you on one point though.
If you call a Impala that clean a "Project" then I'd hate to see your better, completed one. Can't beat those old boats. If you get a chance post some pics of the inside, especially view from the drivers seat, dash and radio console. Had a buddy that had a '62 Mercury Monterrey, Wish I had bought it from him when he sold it. Only needed paint and upholstery work, it even had the power REAR window. Ran like a beast!

 

[Bruce4310TX]

do it live on the edge

 

[the lone]

I will disagree with you on one point though.
If you call a Impala that clean a "Project" then I'd hate to see your better, completed one. Can't beat those old boats. If you get a chance post some pics of the inside, especially view from the drivers seat, dash and radio console. Had a buddy that had a '62 Mercury Monterrey, Wish I had bought it from him when he sold it. Only needed paint and upholstery work, it even had the power REAR window. Ran like a beast!

thanks. when i say project i mean...still needs odd and ends to clean up...its a dam solid driver, here are some pics. i just freshened up the interior, new glass and weatherstrip, dyed the door panels, etc. i polish my own aluminum and stainless trim. i do alot of my own work. reason i want the shop is to have a place to paint/body....and swap chassis with lift, etc.

http://s1180.photobucket.com/albums/x413/lonestar60/?action=view&current=2012-04-21_15-52-27_689.jpg

so i dont have to mess with this outside with no shade.

 

[the lone]

heres a couple more ive had. this 63 was all original . 1 owner car, i mean ALL original. a/c still worked on it. sold it, hated to, but i used the money to come up with downpayment for this place.

 

[the lone]

here was a 60 cv i owned about 2 yrs ago. this was probably the nicest, but i dont miss it one bit. selling it was a blessing in disguise.

64 i had about 5 yr ago

another 64

i have a habit lol. but it keeps me out of trouble.

 

[Jarhead0408]

Awwwww Craaaappppp!
That second pic is why I am now going to have to leave my wife steal your car and disappear with it. Thanks alot for screwing up my life.

Where'd you get those speaker panels from?

 

[Jarhead0408]

What the hell man!!! I'm almost angry now. I can't even post a response and you hit me with an even bigger sledge. Do you realize I drive a FREAKING CIVIC! I can stand pics of the first two Impalas But Dude, you gotta draw a line with that '60. Freaking cruel man. Freaking cruel. Too many nice cars for one post. Mustv'e been fun though.

How was selling the '60 a blessing?
Deal with anything other than Impalas?

 

[the lone]

thanks. on the speaker pods, i actually got the car a few weeks back. it was painted with new carpet and seat covers. i bought misc trim and moldings, glass, freshened up the interior, and have done misc things to it. the previous owner made the pods. they are fiberglassed and painted. look nice, he also did the radio molded into the glove box. im going to add power steering , power seat, gona do the headliner, other odd ends. its a fun car to drive. on the 60, it was a blessing because i was able to get ALOT done with the money, it motivated me to move to current house (id still be dreaming about it) i deal with lowriders or bone stock impalas. ive had others, but they werent impalas. had buicks, cadillacs, monte carlos, i have pics if youd like

 

[Jarhead0408]

Nice pods, he did a good job.
If you don't mind me asking, how much did the '60 go for?
Yeah man throw the other pics up, but if they're as nice as the '60, spare me the pain.