Garage financing options...

[FredWurlitzer]

To make a long story short... Wife and I purchased a home last fall which we plan to stay in for quite some time. Old house (est. 1840), 2,150 sq. ft., on a 0.75 acre square plot. It does not have a garage (apparently had an attached garage, but was taken down at some point for reasons unknown). We would like a garage, but need to find the appropriate funding. I got the OK from the wife to start looking at finance options, or ways to pay for this build. What are our options?

Points to consider:

- With owning the home for less than a year, we obviously do not have much equity built up

- Cash is out of the question, as we just do not have to funds readily available

- We acquired the house for a very reasonable price due to things that needed "finishing" (trim, mouldings, paint, brand new kitchen). Those have since been finished/completed

- All of the work was done by ourselves/family/friends, so there is some "sweat equity" involved. There is very little that we owe on said finished renovations

- I'm 30, she's 33, both have good credit, established/consistent income

Are there loan programs that take into consideration the "new" value of the home now that the updates are completed? I feel that the value of the home has reasonably gone up since our purchase.

 

[yeldogt]

First ...one needs to look at the whole picture (financial picture). Someone with a new home who has little cash .. but, with a reasonable 15 year mortgage, Positive cash flow while making retirement savings --- prospect of income increase, is in a different position vs someone who has just wiped themselves out to buy a house w/ 30 year and is scraping together to match 401k's.

If there has been an increase in equity -- refinancing is possible as is a HELC. You can also see if you can qualify for an improvement loan -- they tend to have higher interest rates. Straight personal loans are expensive -- high interest rates.

Building a garage is expensive and the return is low -- so it's tricky. It's all going to come down to your incomes and current expense percentage. Retirement seems far away .. but putting money away now is so important for compounding towards the future.

 

[Kaizen]

I lived here for 20 years before I built mine. It’s a luxury item. Wait. Save. Trust me when I say things are going to happen and you will be glad you don’t have a pretty garage and no money for heat.


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[ddurrett896]

I lived here for 20 years before I built mine. It’s a luxury item. Wait. Save. Trust me when I say things are going to happen and you will be glad you don’t have a pretty garage and no money for heat.

I've been here for 7 and saved for 3 before building. Pay cash!

 

[klassenl]

It’s a luxury item. Wait. Save. Trust me when I say things are going to happen and you will be glad you don’t have a pretty garage and no money for heat.


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Yes and yes

 

[Indy_500]

First off, what size are you looking at building? A guy could build a 28x32 himself for 25k-30k. Personally, if youre looking at something twice that size i think paying cash would be very hard to do in less than 10 years time, but then again nobody knows your financial situation except you. 25k is probably easily savable in a matter of 5 years. Otherwise, a 2nd mortgage is pretty simple, its pretty much just a personalt loan, which they will hand out like candy if thats the route you want to go. I needed a new roof on my house/attached garage and i also wanted new siding. Together wouldve been about 20k and i was tempted to take out a 2nd mortgage and just get it done. Insteas i paid cash for the roof and I'll save up for the siding. Maybe 3 years from now it'll be done.

 

[mike93lx]

Garages don't add value.

If the value of your house has gone up materially in just a year, it is probably market fluctuations and you should not borrow against it.

 

[redidbull]

As an option to a garage I bought a premade 12x16 mini barn. Cost was 5K delivered. Or you could get something smaller, put it toward the rear of the yard, and use it to at least set up a shop in. We went to this place near me in CT but I am sure there is a quaity place around you. It was about 20 years for me too to do this. College for the kids and life in general made it impractical before this. Jim https://www.carefreebuildings.com/

 

[38Chevy454]

First ...one needs to look at the whole picture (financial picture). Someone with a new home who has little cash .. but, with a reasonable 15 year mortgage, Positive cash flow while making retirement savings --- prospect of income increase, is in a different position vs someone who has just wiped themselves out to buy a house w/ 30 year and is scraping together to match 401k's.

If there has been an increase in equity -- refinancing is possible as is a HELC. You can also see if you can qualify for an improvement loan -- they tend to have higher interest rates. Straight personal loans are expensive -- high interest rates.

Building a garage is expensive and the return is low -- so it's tricky. It's all going to come down to your incomes and current expense percentage. Retirement seems far away .. but putting money away now is so important for compounding towards the future.

Totally agree. Put your retirement savings as priority. Compounding is the key to successful retirement. Any leftover money after savings can go to the garage. You may be able to get a small amount of HELOC, and you could get a bare bones unfinished interior garage put up. Then do your own interior finishing work to make it nicer as cash funds allow. Just do not get into a position that if either you or wife loses income that you lose everything. Just because a bank might approve you for a certain loan amount, does not mean it is smart to max out that certain loan amount.

 

[Dibiase77]

As an option to a garage I bought a premade 12x16 mini barn. Cost was 5K delivered. Or you could get something smaller, put it toward the rear of the yard, and use it to at least set up a shop in. We went to this place near me in CT but I am sure there is a quaity place around you. It was about 20 years for me too to do this. College for the kids and life in general made it impractical before this. Jim https://www.carefreebuildings.com/

I know where I'm at there is a lot of companes that sell sheds and slightly bigger than sheds that people pay monthly on. My dad had looked at a 12x16 and they quoted him $100 a month. Which isn't bad and you won't have to get a loan for. Plus it will give you a little workspace til you can get together funding/ financing together.

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[38Chevy454]

First ...one needs to look at the whole picture (financial picture). Someone with a new home who has little cash .. but, with a reasonable 15 year mortgage, Positive cash flow while making retirement savings --- prospect of income increase, is in a different position vs someone who has just wiped themselves out to buy a house w/ 30 year and is scraping together to match 401k's.

If there has been an increase in equity -- refinancing is possible as is a HELC. You can also see if you can qualify for an improvement loan -- they tend to have higher interest rates. Straight personal loans are expensive -- high interest rates.

Building a garage is expensive and the return is low -- so it's tricky. It's all going to come down to your incomes and current expense percentage. Retirement seems far away .. but putting money away now is so important for compounding towards the future.

Totally agree. Put your retirement savings as priority. Compounding is the key to successful retirement. Any leftover money after savings can go to the garage. You may be able to get a small amount of HELOC, and you could get a bare bones unfinished interior garage put up. Then do your own interior finishing work to make it nicer as cash funds allow. Just do not get into a position that if either you or wife loses income that you lose everything. Just because a bank might approve you for a certain loan amount, does not mean it is smart to max out that certain loan amount.

 

[mike93lx]

I know where I'm at there is a lot of companes that sell sheds and slightly bigger than sheds that people pay monthly on. My dad had looked at a 12x16 and they quoted him $100 a month. Which isn't bad and you won't have to get a loan for. Plus it will give you a little workspace til you can get together funding/ financing together.

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Whats the interest rate? Bet it isn't very attractive unless that workspace is earning you money.

Borrowing to store the **** most people keep in a shed is stupid. Plain and simple

 

[Moose97]

Looks like you are getting solid, sound advice! It's likely not what you want to hear but it is the BEST advice. I saved up my money and poured a 20X16 slab. Let it sit for a couple of years until I could afford to build my shop on top of it. Wanted to get more work space a couple of years later so I added a deck (20X20) to one side. Now I am saving to add a 20X16 concrete parking space to the other side.

Is this what I wanted? Nope. Would I like to have one of these awesome metal shops I see here on GJ? Absolutely. Unfortunately it's not in the cards for me right now. House will be paid off in 6 years then I'll take my barn (animal space), concrete the floors and run some electricity and have a 36X36 shop but for now I'm able to get by with this.

As others have said, get your retirement savings moving in the right direction, pay down on that new home (if your in a 30 year mortage change to a 15 asap) and save up to pay cash for that new garage. You'll be happy you did soon enough.

 

[Dibiase77]

Whats the interest rate? Bet it isn't very attractive unless that workspace is earning you money.



Borrowing to store the **** most people keep in a shed is stupid. Plain and simple

It's only a 2 year loan I believe is what my dad was quoted at for $100 a month. If the OP is needing or wanting a garage workspace its a more feasible option to go with then getting a huge loan to build a garage. This way the OP has some workspace. My dad would have went with it but he found a new place that has a garage so it isn't necessary.

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[Stuart in MN]

Whether or not you put the whole thing on hold and save until you can pay cash for it is a separate question. That depends on what kind of garage you're talking about - of course, a basic one car will be a lot less expensive than a completely furnished multi car.


One other option you can explore is a personal line of credit account with your bank.

 

[mike93lx]

It's only a 2 year loan I believe is what my dad was quoted at for $100 a month. If the OP is needing or wanting a garage workspace its a more feasible option to go with then getting a huge loan to build a garage. This way the OP has some workspace. My dad would have went with it but he found a new place that has a garage so it isn't necessary.

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You avoided the question. Term doesnt matter nearly as much as the interest rate.

 

[Dibiase77]

Its like a $2000 dollar shed. I don't know the interest rate. What's a better deal spend 10-20-30k on a garage they may not have the Money for and get a loan for that. Then what? The heat bill needs paid. Or the kids get sick or he gets laid off or 1000 other things that could happen. But the loan for that big garage is quite a bit of money. Or the OP could get a little shed for a workspace now without a bank loan or refinancing or touching the equity in the house for $100 a month or whatever they charge where he is at. Plus if he doesn't want it anymore he just stops paying and they come pick it up. not the best idea but if he's looking for a lower cost option than a big loan it might work for him. At least the op would have a workspace. Yes interest rate is very important. but location of where he's at is more important because the interest rate there is what matters.

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[Cougar67]

I'm with the crowd that says don't borrow and build your retirement money. You can build a shed with cash. Maybe you can find a second gig such as selling things on eBay and save all that money in your garage fund. You might even find a used shed on Craigslist that you can repair. There was an ugly big one near me recently for about $500.

IMO you should not finance "wants."

 

[polizei1]

I say go for it, as long as the interest rates are stupid and the payments are reasonable. Paying cash for everything is solid advice, but not possible for a lot of people, especially when it comes to large purchases such as these...

I built a home, moved in last fall. People said I was stupid, I borrowed too much money, not living within my means, etc. etc. Guess what, I don't care! I can pay all my bills, I just don't take $5k vacations like a lot of other people do. It's all about what you want, and what you're willing to compromise to get it. I'm 29, I didn't want to live in a small, old home. I didn't want to wait until retirement to finally have a nice home. Nothing against those that do that, it's just not what I wanted.

I lived in an apartment for a year and hated everything about it, now having a 832sqft 3-car garage, it's SOOOOO nice.

 

[Natemade]

Im going to go against the grain too..
When i bought my house cheap and pulled equity out of it after 6 months. The evaluated price was about 160 percent of what i paid and i pulled out 40k to build a 30x60 shop for myself. Im 30 and like you was told it was a bad financial choice but you know what... i can afford the payment and have a shop to use the next 30 years.

When im 60 my house and shop will be paid off. The same age i would be whem just my house would be paid off. Now im not suggesting you live outside your means but an extra 100 bucks a.month is worth.it to.me to have a space i really want and use. Just.my .02

 

[FredWurlitzer]

Wow! I wasn't expecting such a response in such a short period of time! Thank you all so much for your input.

- In regards to my retirement, my employer has a fairly lucrative program. Supposedly one of best in the region. They give 6% to my 403b regardless of what I put in, and 10% anything over $50,000/year. I agree and believe we're on the same page in that saving for the future is key, especially now in my 30's.

- The square footage I had in mind would be a minimum 24x24, but my current focus is on the financial aspects before I even begin thinking about planning and development. Should I change my focus to size, features, layout, utilities, etc.. to determine my price range?

- I currently have a shed (maybe a 10x18, haven't measured), that's packed to the gills.

- I feel our current monthly income to expense ratio has enough cushion to afford an extra $50, 75 or even 150/month payment, while also having enough to add to savings

- I assume there's "unofficial" ways to determine the home's worth, without it affecting your taxes?

With that said, I'm not about to go out and borrow money that's associated with a high interest rate. If the return on investment on a garage is that low, it does not seem financially sound to borrow with a high interest rate. I would also say I'm not the type to borrow the max amount of money that is offered, I understand that the garage is not mine until it is paid off. I just feel that there is enough equity (total worth of the house) to help fund a garage build. I do need to do some research in the difference between a home equity loan vs. a HELOC..

 

[rjschi21]

I am in a similar situation. I am 28, wife is 25 .We purchased our 2nd house a little over a year ago and I am close to pulling the trigger on a 30'x30'x12' pole building on my property. I have about half of the cost in cash and then I am utilizing a HELOC to finish the project. My bank uses an "assessed market value" to determine my property value for my line of credit. Maybe your bank does the same? They didn't physically appraise it, they looked up the address on their program and told me what kind of money I could borrow.

 

[Hilltopmasonry]

I am kind of mixed about whether it’s smarter to borrow money or pay cash.

Of course saving up and paying cash is definitely the wiser decision however if this is going to be a 10 year long process especially if you pour the slab one year and wait and do a little bit every year for 10 years then I would prefer to finance it get it over with and just pay that down instead of making it a lifelong process to build a garage with cash

I know somebody that made the mistake of doing a home renovation by paying cash and putting in sweat equity and it turned into a six-year a project

It was a disaster zone for six years and I think it would just be wiser to finance it and getting it done and move on with life and enjoy the new addition and be able to focus on hustling and making more money at my primary job instead of constantly having a project every day when I get home from work and tying up all of my free time including my weekends with an ongoing project


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[redidbull]

When we got married, 34 years ago, we always tried to live a life that if something were to happen with a job we could survive on 1 paycheck. During the time I was laid off 3 times and had a few companies fold and my Wife once. We also had 2 children and they both went to college and that is getting more expensive by the day. I can see and slightly agree with get what you want when you want it but in your 20's and 30's there is a lot of life ahead and it ***** to be out of work and scrapping to pay bills. If you can swing it and afford it now just be aware of things that could happen in the future. Jim

 

[Matt 330LS]

I do need to do some research in the difference between a home equity loan vs. a HELOC..

In the most general terms the loan is just that, a fixed amount with fixed terms. Say your garage is estimated at $30k, you borrow $30k at X% and you pay back $30k.

The HELOC is an open line of credit up to a certain amount of your equity. The rate is fixed (or can be), and you only use what you need out of the line of credit (and therefore only pay interest on what you use). Example is you have a $30k HELOC, but the garage only ends up costing you $20k. You borrow the $20k on that open line of credit and pay it back at X%.

 

[LB-1911]

The square footage I had in mind would be a minimum 24x24, but my current focus is on the financial aspects before I even begin thinking about planning and development. Should I change my focus to size, features, layout, utilities, etc.. to determine my price range?

Start here - Check your City / County website(s) Building Dept / Permitting office for any pre construction guidance.

Verify your setbacks, easements, height restrictions and draw up a quick site plan.

Are you on septic or sewer? If septic a reserve area may very well be required.

Site plan example

 

[yeldogt]

My post (#2) was not against borrowing the money ... there is nothing "wrong" with borrowing money for home improvement and life wants. It's better to borrow the money and get a job done vs having it unfinished for 6 years.

 

[FredWurlitzer]

I am kind of mixed about whether it’s smarter to borrow money or pay cash.

Of course saving up and paying cash is definitely the wiser decision however if this is going to be a 10 year long process especially if you pour the slab one year and wait and do a little bit every year for 10 years then I would prefer to finance it get it over with and just pay that down instead of making it a lifelong process to build a garage with cash

I know somebody that made the mistake of doing a home renovation by paying cash and putting in sweat equity and it turned into a six-year a project

It was a disaster zone for six years and I think it would just be wiser to finance it and getting it done and move on with life and enjoy the new addition and be able to focus on hustling and making more money at my primary job instead of constantly having a project every day when I get home from work and tying up all of my free time including my weekends with an ongoing project


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This is what I'm afraid of.. I don't mind taking my time, but I don't want this to drag on forever. If we were to go forward with this, I probably wouldn't break ground until next spring anyway. The time from now until then would be spent on planning, researching and development.

I/we would probably do majority of the work ourselves just as we have with the house renovations. My father and both grandfathers have been involved in helping and if it wasn't for them, the house wouldn't be where it is today. My father was a union carpenter for 20 years, and both grandfathers were in the construction business for much much longer than that. Myself? I work in healthcare and was never really taught by them the skills necessary for their trade. I always enjoy watching them work and they way they think.

The opportunities to have those experiences with them is slowly dwindling.

When we got married, 34 years ago, we always tried to live a life that if something were to happen with a job we could survive on 1 paycheck. During the time I was laid off 3 times and had a few companies fold and my Wife once. We also had 2 children and they both went to college and that is getting more expensive by the day. I can see and slightly agree with get what you want when you want it but in your 20's and 30's there is a lot of life ahead and it ***** to be out of work and scrapping to pay bills. If you can swing it and afford it now just be aware of things that could happen in the future. Jim

This is what I'm afraid of.. owning a house built in 1840, there is for sure something that is coming down the pipe that will be unexpected. I've sort of accepted that fact when we bought the house.

Start here - Check your City / County website(s) Building Dept / Permitting office for any pre construction guidance.

Verify your setbacks, easements, height restrictions and draw up a quick site plan.

Are you on septic or sewer? If septic a reserve area may very well be required.

I am on septic. Reserve area? Apologies, but I'm not quite sure what that is.

 

[Jazz1]

See your banker and tell him you want a garage, refinance your house. If banker won't refinance that tells you borrowing money is going to be at high interest rate with a B lender.

 

[Notgrownup]

Talk to your banker or mtg broker... Saving money over 10 years and wishing you had a garage???.. I know which one I would be doing...money In savings ain’t doing ****, I would rather get a really low interest loan or small line of credit or 2nd mortgage and be happy.
Having a garage adds value to you, that is what counts. Life is too short not to have a garage.
May not always be the smartest thing to do but if you always put **** off until it’s too late, then you didn’t enjoy it at all...

 

[stm317]

I'm about your age and similar situation and I wouldn't be comfortable doing that in your position. Your house is 170 years old, you're not that handy (so you'd likely be paying somebody else to do repairs), you've only got about $150/month in excess income (I'd want to be able to handle an extra 500 per month at least), it's a recent purchase with little equity so closing costs on a refi would be prohibitive, financing luxury items that will never increase in value is wasteful at best and ruinous at worst, etc.

But I tend to be pretty conservative when it comes to debt and the roof over my head. Others are a bit more relaxed with these things. If you're comfortable with the added debt, you've got a sizeable emergency fund to cover major home repairs/job loss/medical emergencies/etc, your retirement is well funded, and you think you've got enough cash flow every month to handle the extra payment without issue then go for it.

As others have said, what you do in your 20s-early 30s sets the foundation for the rest of your life. This is not an area where you should be overly optimistic. Plan for the worst and hope for the best. Build your foundation to handle the 'worst case scenario' and you'll never have major issues even as life happens. If you're certain that your foundation is right and solid and there's still a bit of extra cash then I think it's ok to splurge on a garage. But if having a garage would mean sacrificing in other areas, walking on thin financial ice, or a less secure foundation for your future that would be a mistake that could stick with you for the rest of your days. Look around your life/future plans (kids? Stay at home parent?) and make good choices based on your situation now and where you'll be in the future. Life is all about making choices. Make good ones and life is easier/better. Make poor choices and life gets harder/worse pretty fast.

 

[mike93lx]

I'm about your age and similar situation and I wouldn't be comfortable doing that in your position. Your house is 170 years old, you're not that handy (so you'd likely be paying somebody else to do repairs), you've only got about $150/month in excess income (I'd want to be able to handle an extra 500 per month at least), it's a recent purchase with little equity so closing costs on a refi would be prohibitive, financing luxury items that will never increase in value is wasteful at best and ruinous at worst, etc.

But I tend to be pretty conservative when it comes to debt and the roof over my head. Others are a bit more relaxed with these things. If you're comfortable with the added debt, you've got a sizeable emergency fund to cover major home repairs/job loss/medical emergencies/etc, your retirement is well funded, and you think you've got enough cash flow every month to handle the extra payment without issue then go for it.

As others have said, what you do in your 20s-early 30s sets the foundation for the rest of your life. This is not an area where you should be overly optimistic. Plan for the worst and hope for the best. Build your foundation to handle the 'worst case scenario' and you'll never have major issues even as life happens. If you're certain that your foundation is right and solid and there's still a bit of extra cash then I think it's ok to splurge on a garage. But if having a garage would mean walking on thin financial ice, or a less secure foundation for your future that would be a mistake that could stick with you for the rest of your days. Look around your life/future plans (kids? Stay at home parent?) and make good choices based on your situation now and where you'll be in the future. Life is all about making choices. Make good ones and life is easier/better. Make poor choices and life gets harder/worse pretty fast.

to be fair, he didn't say he only has $150/month excess. he said that is what he can afford, which could just mean all he wants to allocated.

If that is all of the excess, then I agree, putting it all to debt service is a terrible idea.

 

[stm317]

Another approach is to deal with the math and let that decide for you.
A stick built 24X24 is probably going to cost 20-40k to have built (get estimates). A 30k loan over a ten year term is about $330/month. If you stretch it out to 30 years so the garage and house were basically paid off at the same time you would still be committing to about $175/month for three decades!

 

[mike93lx]

Another approach is to deal with the math and let that decide for you.
A stick built 24X24 is probably going to cost 20-40k to have built (get estimates). A 30k loan over a ten year term is about $330/month. If you stretch it out to 30 years so the garage and house were basically paid off at the same time you would still be committing to about $175/month for three decades!

it's important to remember that this type of loan will be at a much higher rate than the primary mortgage. your calc above looks like ~6%, which may even be low.

paying $63k over 30 years to get a $30k garage/workshop is too much for me.

I couldn't even justify a 30 year on my house, let alone what amounts to a toy.

 

[LB-1911]

I am on septic. Reserve area? Apologies, but I'm not quite sure what that is.

Your City / County Health Dept and or Bldg Permit Dept will have information / guidance that is applicable for your location.

A reserve area is;

Every new home or building served by a septic system is required to have a designated replacement or reserve area. This is a designated area suitable for a new drainfield and must be treated in the same manner as your existing drainfield.

Source of above and full text @
https://www.co.thurston.wa.us/health/ehoss/drainfield.html

 

[FredWurlitzer]

to be fair, he didn't say he only has $150/month excess. he said that is what he can afford, which could just mean all he wants to allocated.

If that is all of the excess, then I agree, putting it all to debt service is a terrible idea.

That is correct.. my income to expense ratio per month leaves an excess of much more than $150. I wouldn’t even be considering a garage if that were the case, let alone living in this house.

it's important to remember that this type of loan will be at a much higher rate than the primary mortgage. your calc above looks like ~6%, which may even be low.

paying $63k over 30 years to get a $30k garage/workshop is too much for me.

I couldn't even justify a 30 year on my house, let alone what amounts to a toy.

This is the part I have trouble swallowing, the amount you pay in interest over the life of the loan, and ultimately the total cost of the garage. I guess APRs are APRs.. nothing you can do about it. (Besides cash) One could hope that rates drop at some point in the future and then refinance? Not sure if that’s something worth “banking” on, I don’t know enough in the banking/finance world to see where trends are going.

Your City / County Health Dept and or Bldg Permit Dept will have information / guidance that is applicable for your location.

A reserve area is;

Every new home or building served by a septic system is required to have a designated replacement or reserve area. This is a designated area suitable for a new drainfield and must be treated in the same manner as your existing drainfield.

Ahhh ok. Thank you for that. Like a back up site allocated for your septic tank and/or leech field?

 

[JamesW84]

I couldn't even justify a 30 year on my house, let alone what amounts to a toy.

Did you calculate the future value of the difference in principle with a 15 yr vs 30 yr? I calculated for my situation that it was like earning 6% interest to go 15 over 30. My 401k is doing much better than that, so it is wiser FOR ME to put the money in my 401k, and may be a better decision for others also.

I would build the minimum size you need, but plan it so you could add on later if desired...this mainly means place it on the land for future expansion. You may not even be there in 10 years. The average is like 8 years to live in one house, which was about what I did on my first house.

Another approach is to deal with the math and let that decide for you.
A stick built 24X24 is probably going to cost 20-40k to have built (get estimates). A 30k loan over a ten year term is about $330/month. If you stretch it out to 30 years so the garage and house were basically paid off at the same time you would still be committing to about $175/month for three decades!

He said he and his family will be doing a lot of the work. Quotes for gravel, concrete, rebar, and materials would be wise though. Depending on where you are and type of construction, you could have a 24x24 maybe $15k or $50k.

I haven't had a shop for 3 years, and only had my garage and small shed at my last house. I'm building my shop now. If it's something you really want, I say sacrifice elsewhere and finance what you can, but MAKE SURE you have at least enough money for 3 months of expenses in savings and don't go below that. You could get laid off or something could happen and you might have trouble getting a loan, but if you have an emergency fund, you can buy what you NEED and have time to figure out what to do. Making financial decisions emotionally, quickly, and/or in a panic can cause bad things to happen.

 

[mike93lx]

That is correct.. my income to expense ratio per month leaves an excess of much more than $150. I wouldn’t even be considering a garage if that were the case, let alone living in this house.



This is the part I have trouble swallowing, the amount you pay in interest over the life of the loan, and ultimately the total cost of the garage. I guess APRs are APRs.. nothing you can do about it. (Besides cash) One could hope that rates drop at some point in the future and then refinance? Not sure if that’s something worth “banking” on, I don’t know enough in the banking/finance world to see where trends are going.



Ahhh ok. Thank you for that. Like a back up site allocated for your septic tank and/or leech field?

Rates are at near historic lows. You are unlikely to do much better than what we have now.

You could refi the second loan into your house, but i would be willing to bet that we'll be looking at mortgages at or over 10% in the next 10-20 years

 

[stm317]

He said he and his family will be doing a lot of the work. Quotes for gravel, concrete, rebar, and materials would be wise though. Depending on where you are and type of construction, you could have a 24x24 maybe $15k or $50k.

I haven't had a shop for 3 years, and only had my garage and small shed at my last house. I'm building my shop now. If it's something you really want, I say sacrifice elsewhere and finance what you can, but MAKE SURE you have at least enough money for 3 months of expenses in savings and don't go below that. You could get laid off or something could happen and you might have trouble getting a loan, but if you have an emergency fund, you can buy what you NEED and have time to figure out what to do. Making financial decisions emotionally, quickly, and/or in a panic can cause bad things to happen.

I think we're on the same basic page. My general point is that a budget of up to $150/ month isn't going to finance very much unless you stretch the term out a really long time. And then not only do you end up about doubling the cost of the garage, but you're committed to that part of your monthly cash flow ******* forever. He needs to figure out what it's going to cost to get what he wants, whether family does the work or not. And then determine if that works within the budget or not. Maybe the budget gets tweaked, maybe the building plans do, or maybe it gets put on the shelf for another time.

The general process should be: Get quotes to understand the cost of the building -->do the math for what it's going to actually cost after interest, insurance and tax increases, etc--> consider your situation/risk tolerance now and how it might differ going forward (kids, etc)--> and then choose the appropriate course of action.

 

[Mdluke]

I say go for it, as long as the interest rates are stupid and the payments are reasonable. Paying cash for everything is solid advice, but not possible for a lot of people, especially when it comes to large purchases such as these...

I built a home, moved in last fall. People said I was stupid, I borrowed too much money, not living within my means, etc. etc. Guess what, I don't care! I can pay all my bills, I just don't take $5k vacations like a lot of other people do. It's all about what you want, and what you're willing to compromise to get it. I'm 29, I didn't want to live in a small, old home. I didn't want to wait until retirement to finally have a nice home. Nothing against those that do that, it's just not what I wanted.

I lived in an apartment for a year and hated everything about it, now having a 832sqft 3-car garage, it's SOOOOO nice.

Why don't we have a like button?