AirTalk.org Aviation discussions newsgroups   Archives   FAQ   Search   Memberlist   Usergroups   Register   Profile   Log in to check your private messages   Log in  home equity loan or refianance to buy airplane?          AirTalk.org Forum Index -> Owning Airplanes View previous topic :: View next topic   Author Message John Doe Guest Posted: Wed Sep 14, 2005 9:44 pm    Post subject: home equity loan or refianance to buy airplane? Read in one of the monthly magazine rags about getting a home equity loan or refinancing your house and getting cash out to pay for an airplane. Has anyone actually done this and if so, is this a better option than just getting a straight aircraft loan. I'm being quoted 6.75% right now for a 20 year fixed for the amount I want to borrow for a plane. Refianance companies have said I could get under 6% if I roll it into my home loan. Any advice would be great. Thanks. Back to top Kyle Boatright Guest Posted: Wed Sep 14, 2005 9:54 pm    Post subject: Re: home equity loan or refianance to buy airplane? "John Doe" <divx (AT) hotmail (DOT) com> wrote Quote: Read in one of the monthly magazine rags about getting a home equity loan or refinancing your house and getting cash out to pay for an airplane. Has anyone actually done this and if so, is this a better option than just getting a straight aircraft loan. I'm being quoted 6.75% right now for a 20 year fixed for the amount I want to borrow for a plane. Refianance companies have said I could get under 6% if I roll it into my home loan. Any advice would be great. Thanks. If you're looking at it from a purely financial standpoint, remember that you can write off the interest paid on a home loan, whereas you can't on an airplane loan. Depending on the term and rate, borrowing against the house could significantly reduce the effective interest rate. KB Back to top Dave S Guest Posted: Thu Sep 15, 2005 2:06 am    Post subject: Re: home equity loan or refianance to buy airplane? this is my opinion, and nothing more... NEVER, EVER jeopardize your homestead to finance a hobby. Dave John Doe wrote: Quote: Read in one of the monthly magazine rags about getting a home equity loan or refinancing your house and getting cash out to pay for an airplane. Has anyone actually done this and if so, is this a better option than just getting a straight aircraft loan. I'm being quoted 6.75% right now for a 20 year fixed for the amount I want to borrow for a plane. Refianance companies have said I could get under 6% if I roll it into my home loan. Any advice would be great. Thanks. Back to top tony roberts Guest Posted: Thu Sep 15, 2005 2:44 am    Post subject: Re: home equity loan or refianance to buy airplane? What Dave said. Tony -- [email]Indiacharlieecho (AT) hotmail (DOT) com[/email] Tony Roberts PP-ASEL VFR OTT Night Cessna 172H C-GICE Quote: this is my opinion, and nothing more... NEVER, EVER jeopardize your homestead to finance a hobby. Dave Back to top zatatime Guest Posted: Thu Sep 15, 2005 3:17 am    Post subject: Re: home equity loan or refianance to buy airplane? On Thu, 15 Sep 2005 02:44:15 GMT, tony roberts <nospam (AT) nowhere (DOT) ca> wrote: Quote: What Dave said. Tony this is my opinion, and nothing more... NEVER, EVER jeopardize your homestead to finance a hobby. Dave Yep. z Back to top #1ACGuy Guest Posted: Thu Sep 15, 2005 6:19 am    Post subject: Re: home equity loan or refianance to buy airplane? Well put! I won't pull money out of my house either. I don't have much on credit, and I pay credit cards in full when I use them, but if I did, I still wouldn't borrow off my house to pay for it. If you get in trouble with car payments because something happens to your income, they repo the car. If you refinance your house to pay off credit cards and auto loans and lose your income, they take your house. An airplane is something I will have to finance, but I"ll keep it separate. The rate you're getting quoted sounds good. Alex Quote: NEVER, EVER jeopardize your homestead to finance a hobby. Dave John Doe wrote: Read in one of the monthly magazine rags about getting a home equity loan or refinancing your house and getting cash out to pay for an airplane. Has anyone actually done this and if so, is this a better option than just getting a straight aircraft loan. I'm being quoted 6.75% right now for a 20 year fixed for the amount I want to borrow for a plane. Refianance companies have said I could get under 6% if I roll it into my home loan. Any advice would be great. Thanks. Back to top TripFarmer Guest Posted: Thu Sep 15, 2005 3:58 pm    Post subject: Re: home equity loan or refianance to buy airplane? You get to deduct the interest you pay with the Home Equity Loan. Trip In article <OQ0We.23172$8q.16954@lakeread01>, [email]divx (AT) hotmail (DOT) com[/email] says... Quote: Read in one of the monthly magazine rags about getting a home equity loan or refinancing your house and getting cash out to pay for an airplane. Has anyone actually done this and if so, is this a better option than just getting a straight aircraft loan. I'm being quoted 6.75% right now for a 20 year fixed for the amount I want to borrow for a plane. Refianance companies have said I could get under 6% if I roll it into my home loan. Any advice would be great. Thanks. Back to top Frank Stutzman Guest Posted: Thu Sep 15, 2005 7:14 pm    Post subject: Re: home equity loan or refianance to buy airplane? Dave S <Dastaten (AT) earthlink (DOT) net> wrote: Quote: this is my opinion, and nothing more... NEVER, EVER jeopardize your homestead to finance a hobby. Well, I MOSTLY agree. This was a dozen years ago, but I had the cash on hand to buy my plane. Instead doing it that way though, I thought it made better sense to take out a home equity loan to buy the plane. I stuck the cash into some relatively safe (hence low-yield) investment. Made a bit of money on investment and at the same time got to deduct the loan interest off the taxes. If something had happened to my income, I would have cashed out the investment and paided off the loan. I never would have done it if I didn't have a way to pay off the loan instantly. Going into pure debt for your hobby is a really bad idea, IMHO. -- Frank Stutzman Bonanza N494B "Hula Girl" Hood River, OR Back to top Dave S Guest Posted: Thu Sep 15, 2005 8:37 pm    Post subject: Re: home equity loan or refianance to buy airplane? Frank Stutzman wrote: Quote: Dave S <Dastaten (AT) earthlink (DOT) net> wrote: this is my opinion, and nothing more... NEVER, EVER jeopardize your homestead to finance a hobby. I never would have done it if I didn't have a way to pay off the loan instantly. Going into pure debt for your hobby is a really bad idea, IMHO. So it was never really in jeopardy! :) Dave Back to top Oracle Guest Posted: Thu Sep 15, 2005 10:46 pm    Post subject: Re: home equity loan or refianance to buy airplane? On Wed, 14 Sep 2005 17:54:44 -0400, Kyle Boatright wrote: Quote: "John Doe" <divx (AT) hotmail (DOT) com> wrote in message news:OQ0We.23172$8q.16954 (AT) lakeread01 (DOT) .. Read in one of the monthly magazine rags about getting a home equity loan or refinancing your house and getting cash out to pay for an airplane. Has anyone actually done this and if so, is this a better option than just getting a straight aircraft loan. I'm being quoted 6.75% right now for a 20 year fixed for the amount I want to borrow for a plane. Refianance companies have said I could get under 6% if I roll it into my home loan. Any advice would be great. Thanks. If you're looking at it from a purely financial standpoint, remember that you can write off the interest paid on a home loan, whereas you can't on an airplane loan. Depending on the term and rate, borrowing against the house could significantly reduce the effective interest rate. KB Doesn't sound like .75% is "significant". ;) Just to hammer this home, most states plus federal laws, make it very hard to lose your house...unless you put it up for collateral on a loan. Once you've done that, you have more or less signed away any protection you previously had. The deal that Frank worked is the only situation I would ever dream of doing a home equity loan. And, don't forget, should the worst happen, you not only need enough to pay off your loan, but enough to live off of until things get better. Don't confuse that money with "nest-egg" money. Greg Back to top Kyle Boatright Guest Posted: Sat Sep 17, 2005 12:21 am    Post subject: Re: home equity loan or refianance to buy airplane? "Oracle" <nospam (AT) nowhere (DOT) com> wrote Quote: On Wed, 14 Sep 2005 17:54:44 -0400, Kyle Boatright wrote: "John Doe" <divx (AT) hotmail (DOT) com> wrote in message news:OQ0We.23172$8q.16954 (AT) lakeread01 (DOT) .. Read in one of the monthly magazine rags about getting a home equity loan or refinancing your house and getting cash out to pay for an airplane. Has anyone actually done this and if so, is this a better option than just getting a straight aircraft loan. I'm being quoted 6.75% right now for a 20 year fixed for the amount I want to borrow for a plane. Refianance companies have said I could get under 6% if I roll it into my home loan. Any advice would be great. Thanks. If you're looking at it from a purely financial standpoint, remember that you can write off the interest paid on a home loan, whereas you can't on an airplane loan. Depending on the term and rate, borrowing against the house could significantly reduce the effective interest rate. KB Doesn't sound like .75% is "significant". ;) Just to hammer this home, most states plus federal laws, make it very hard to lose your house...unless you put it up for collateral on a loan. Once you've done that, you have more or less signed away any protection you previously had. The deal that Frank worked is the only situation I would ever dream of doing a home equity loan. And, don't forget, should the worst happen, you not only need enough to pay off your loan, but enough to live off of until things get better. Don't confuse that money with "nest-egg" money. Greg And .75% probably isn't significant, but the real difference is probably 2.5% after taxes are considered. Over 20 years, that is real money. I've never purchased a toy (or car, or anything else) on home equity, but from a purely financial sense, the home equity loan makes sense. Beyond that, if you get into a cash crunch, you can sell the airplane to cut your outflow, and hopefully bring in some cash (unless you're upside down on the airplane loan). I'm sure its been done, but you'd have to be pretty dumb to let your home equity loan that financed your airplane cost you the house... KB Back to top Gary Guest Posted: Mon Sep 19, 2005 7:08 am    Post subject: Re: home equity loan or refianance to buy airplane? "Kyle Boatright" <kboatright1 (AT) comcast (DOT) net> wrote Quote: "John Doe" <divx (AT) hotmail (DOT) com> wrote in message news:OQ0We.23172$8q.16954 (AT) lakeread01 (DOT) .. If you're looking at it from a purely financial standpoint, remember that you can write off the interest paid on a home loan, whereas you can't on an airplane loan. Depending on the term and rate, borrowing against the house could significantly reduce the effective interest rate. KB Maybe if you live in the states! Up here in canada I don't think you can write off any debts on a house or anything unless you use it for buisness! Even then there may be many restrictions on how much or on what you can "write-off". CCRA (Canada Customs and Revenue Agancy) is one of the most tight-assed of any govermant body in Canada Back to top Greg Copeland Guest Posted: Tue Sep 20, 2005 1:32 pm    Post subject: Re: home equity loan or refianance to buy airplane? On Fri, 16 Sep 2005 20:21:08 -0400, Kyle Boatright wrote: [snip] Quote: And .75% probably isn't significant, but the real difference is probably 2.5% after taxes are considered. Over 20 years, that is real money. I've never purchased a toy (or car, or anything else) on home equity, but from a purely financial sense, the home equity loan makes sense. Beyond that, if you get into a cash crunch, you can sell the airplane to cut your outflow, and hopefully bring in some cash (unless you're upside down on the airplane loan). I'm sure its been done, but you'd have to be pretty dumb to let your home equity loan that financed your airplane cost you the house... KB Really depends on the market. If you get in a pinch, to unload your plane, you may have to sale it at a loss to simply stop the bleeding...and that assumes you can find a buyer in the time frame needed. Obviously, we're not talking absolutes here but the reality is, home loans do come with a risk which is often ignored. There is certainly nothing wrong with highlighting the fact that a home equity loan is waving a lot of protection you have under the law; which is why it's not legal in all states. You're also assuming that everyone manages their money as well as you do. I can assure you not everyone has a mind for money. 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