mjb49 wrote: ↑

Sat Jul 21, 2018 11:05 am

dandinsac wrote: ↑

Sat Jul 21, 2018 10:50 am

One approach would be to start with the HELOC and use those funds to get the project started. I did this with a kitchen remodel and when I didn’t have enough funds in my checking, I’d write checks from the HELOC as needed to pay my contractor. You shouldn’t have to take out the loan in a lump sum.

At the end of 2018, withdraw from the IRA as much as you can without paying the 22% Federal tax rate. Then pay off part of the HELOC with these funds. This will lower your balance and payments. Do the same thing in 2019.

Once you start taking social security, if you have other sources of income, it will be more difficult to stay below the 22% tax level.

I would recommend that you work to pay off the HELOC much sooner than 10 years as it’s likely to be a higher cost than you’ll earn from the IRA investments. Also, if it is an adjustable rate, you’ll want to watch that closely. Your interest payments may go up to a point where it makes sense to pay it off faster.

I like this idea!

The rate on our HELOC has gone up 0.5 percentage points already in 2018.

So I definitely would not assume that your current 4.25% will stay constant over 10 years.

Source

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=254454&p=4030318