home equity loan or refianance to buy airplane?

[John Doe]

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.

[Kyle Boatright]

"John Doe" > wrote in message
news:OQ0We.23172$8q.16954@lakeread01...
> 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

[Dave S]

this is my opinion, and nothing more...

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.
>
>
>

[tony roberts]

What Dave said.

Tony
--

Tony Roberts
PP-ASEL
VFR OTT
Night
Cessna 172H C-GICE

> this is my opinion, and nothing more...
>
> NEVER, EVER jeopardize your homestead to finance a hobby.
>
> Dave

[zatatime]

On Thu, 15 Sep 2005 02:44:15 GMT, tony roberts >
wrote:

>What Dave said.
>
>Tony

>
>> this is my opinion, and nothing more...
>>
>> NEVER, EVER jeopardize your homestead to finance a hobby.
>>
>> Dave


Yep.

z

[#1ACGuy]

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
>
> 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.
>>
>>
>>
>

[TripFarmer]

You get to deduct the interest you pay with the Home Equity Loan.


Trip

In article <OQ0We.23172$8q.16954@lakeread01>, says...
>
>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.
>
>
>

[Frank Stutzman]

Dave S > wrote:
> 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

[Dave S]

Frank Stutzman wrote:
> Dave S > 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

[Oracle]

On Wed, 14 Sep 2005 17:54:44 -0400, Kyle Boatright wrote:


> "John Doe" > wrote in message
> news:OQ0We.23172$8q.16954@lakeread01...
>> 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

[Kyle Boatright]

"Oracle" > wrote in message
news:pan.2005.09.15.22.46.30.659862@asdf...
> On Wed, 14 Sep 2005 17:54:44 -0400, Kyle Boatright wrote:
>
>
>> "John Doe" > wrote in message
>> news:OQ0We.23172$8q.16954@lakeread01...
>>> 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

[Gary]

"Kyle Boatright" > wrote in message
...
>
> "John Doe" > wrote in message
> news:OQ0We.23172$8q.16954@lakeread01...
> >
>
> 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

[Greg Copeland]

On Fri, 16 Sep 2005 20:21:08 -0400, Kyle Boatright wrote:

[snip]
>
> 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.

Greg

[Steven Barnes]

Which do you think?