Long time clients came in with a big problem. They had taken out a 20 year loan at 3.25% fixed rate in 2015, but now needed money.
Their goal was to pay off the house as fast as possible. But now that they had paid it down, and did not have emergency reserves, they would have to get a home equity line of credit at 5% interest OR refinance. The reason they needed the money was that their mother needed to use a walker everywhere (even in the house), and possibly a wheel chair soon.
She couldn’t maneuver into the bathroom or kitchen because the doorways were too narrow.
She was upset because she knew she couldn’t live there long with the house the way it was. She had lived there for 30 years, and it was heartbreaking.
We were able to come up with a plan to take cash out of the house in the form of a new loan: so that the doorways could be widened, ramps in the front stoop and back stoop could have ramps, fix the extreme cracks in the driveway, and make her a step in bath/shower and wider bathroom to accommodate the walker.
She can now continue to live in her house! And keep the same payments. Luckily interest rates, though higher, are not exorbitantly higher, so this still could be done. At another 1% higher it probably wouldn’t have worked.
Lesson learned: have cash reserves.