home equity loan or refianance to buy airplane?

"Oracle" wrote in message
newsan.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

"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

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

Which do you think?