Also, a lot of people who anticipate only being between jobs for a short time will play the COBRA waiting game and use it as a temporary insurance. They give you 60 days to decide so if you don't decline it, you can be covered in the case of emergency for those two months. If you don't end up needing insurance, then you don't pay anything but if you do need it within those 60 days, you can elect COBRA and it covers you retroactively from the day it was offered. Also, once you elect it, you have 45 days to send in payment, so you could elect it and then just not pay if you don't need it, So in theory you could have over 100 days of emergency insurance for free if you don't end up needing it, and you would only have to pay the premium if you do need it, which is far less than a hospital bill . I don't know how strictly ethical it is to do that but it's how their rules are set up and it is often a lifesaver for people in difficult situations.

Hi Len VT, If you've been holding your stocks for an extended period, you'll likely have a substantial capital gain built up and if you liquidate investments you'll have capital gain tax to pay, which will mean that you'll have to liquidate a larger amount of pre-tax asset value in order to have the after-tax amount needed for your renovation. Not only that, you'll have to pay commission to sell them and, after the house loan is paid off, commission again to re-purchase, supposing that you'd choose to buy the same stocks later. Not only that, I think that the markets are down now, so I'd rather not liquidate some of my stock market-based assets, these days, lacking serious need. In fact, I've been buying more, recently, and expect to buy more, later, as I expect an advance in the markets, though I think that it may be later than jkom51 thinks. I hear some folks telling of set-up costs related to a home equity line of credit, which is understandable, as a lender wants to be sure that the property is as claimed, is properly evaluated, lacks large loans against it now, etc. I have used stock certificates and mutual fund certificates as collateral for a line of credit, and had no set-up fees to pay. If you were to use stocks or mutual funds, you might qualify for a lower interest rate, in that liquidation would be much easier, in case of default. Also, I've allowed my line to sit unused for substantial periods, and there have been no inactivity fees, either. In fact, in that you have much larger assets than you'd need to liquidate to fund your upgrade, you might choose to take out a larger loan and make some increased equity investments currently. I understand that the interest rate on your home improvement loan would be deductible, but not being a resident of your country I'm not sure. If it is not, you'd want to keep the two loans separate, as the line of credit for further equity investment would be deductible in your area, I'm almost positive. While interest rates currently are low, I expect to see them rise, for when one considers the bad odour internationally that has developed in recent months over the U.S. sub-prime mortgage debacle, and the huge U.S. gov't. debt, much of it held abroad, it could well be that, in the light of the deficits developed recently, largely due to the Iraq war, it may be necessary for the U.S. gov't. to offer higher rates to foreign holders in order to entice them to make further loans, before long. Good wishes as you consider your options further - I hope that you are happy with your choices, later. ole joyful

I don't think you need to do anything right now. If the house sells at a satisfactory price, then both the first mortgage and the equity loan balance will be paid off at the closing, and the balance (minus agent's commission, if your using one) will go to you. You definitely should NOT pay off the loan with your savings. That cash provides you with financial flexbility that you will lose if you pay off the loan. A recent widow should hang on to her cash reserves until life settles down and her financial situation becomes more certain. If the equity loan is a HELOC with a floating interest rate and the house doesn't sell by the end of the summer season, you probably should do a refinance and combine both loans into one so that you don't have to worry about the possibility of rising interest rates inflating the size of the HELOC payments.

Wow! Thanks for all the additional feedback. You've given me even more to think about, although it all seems a little bit clearer now. whode, you are definitely right that putting the money into principal makes it less accessible. Though we are generally very disciplined, there is a high chance that we would dip into a more accessible savings account, or perhaps not be as disciplined about putting the money away in the first place. By setting our mortgage minimum (the real mortgage payment + our self imposed principal payment) we don't seem to waver much if ever. I have to think that whether we pay off the mortgage ASAP, build up savings, or do a little of both, we are still heading in the right direction. I have so many friends who discuss why you shouldn't pay off your mortgage, but then they don't/can't save any money on the side so they really aren't getting ahead on any level, are they? Thanks again. Q