I've recently moved into a condo complex that I've now learned needs a lot of urgent work done. We haven't yet gotten a final figure, but it's looking like a $30k-$40k assessment may be in my near future.
My options:
- 401(k) loan - I haven't gotten confirmation on what the interest rate would be, but some research has suggested that it's the prime rate plus around 1%-2%, so about 6.25%-7.25%, up to 5 years
- Home Equity Loan - The estimate I got from Discover was 11.74% for a $40k loan, up to 30 years
- Emergency Fund - I still need to leave a cushion for other sudden changes like layoffs or similar, so I don't want to do too much from here
I'm not considering a personal loan since my understanding is that that would very likely be a higher rate than the HELOAN.
I'm inclined to think that the 401(k) is best since at least the "interest" is re-invested into my retirement savings. Though the monthly payment will be higher than the HELOAN, I could make it work. I can't really come up with a good justification for the Home Equity Loan in comparison since it'd cost me so much in interest.
The second question would be (and this is probably just a personal comfort level thing)...how many month's worth of expenses of my cash reserves should I throw at this? Right now, my Emergency Fund is 6 months of expenses assuming no unemployment benefits. Closer to 8 with unemployment.
I guess the last question would be...am I missing anything? Any other options?
Submitted June 09, 2023 at 10:20PM by Tight_Couture344 https://ift.tt/te5D8hC
