As a general rule, you're better off borrowing money than tapping into savings as long as the interest rate of the loan is less than what you're making on the savings, after taking taxes into account.

In practice, this comparison may be difficult to make, because both the prospective loan and the savings' earnings may be variable in rate and thus hard to forecast. In that case, you need to factor in the cost of misestimating as well. But the basic idea is still sound.

I would get the loan. At this time, you have about all the retirement savings you will ever get. Unless you have way too much money saved for retirement, why take some out when you cannot replace it?

retirement savings sometimes can't be tapped without penalty.

Are there tax-deferred retirement savings at issue? As someone said, sometimes using them involves penalties.

Would a Line of Credit from credit union or bank be available?

And at what rate of interest?

Maybe use that to finance the repairs.

Would you be interested in a second mortgage - and what rate of interest, compared with a Line of Credit? Also, maybe hard to get, in your 70s.

Do you have credit cards? Paying off balances in full monthly? It's important to do that.

Good wishes as you seek to make the most advantageous decision.

ole joyful

The penalty shouldn't apply if the OP and spouse are already over 70.

If you have the money and you are 70 years old I would pay for the repairs with cash, sell the house and retire to a less expensive area. Main reason is that you will pay interest + closing costs + mortgage tax on the home equity loan, and there is no low risk investement that will come anywhere close to beating that.

Most home equity loans do not have closing costs or fees. We paid a total of 75 for ours. If you really think you can sell in less than a year I would definitely do the loan unless the interest rate is ridiculous or the amount is miniscule compared to what you have saved. For example, I would not bother with a 25k loan if you have over 1M in savings

Thanks for the replies. We have a mortage on the home of $50,000, a home equitity loan of $40,000 with an attached line-of-credit for $500,000 which we never touched. The two other loans are fixed at 6.6% but if we use the line-of-credit it will rise depending on the prime rate. I took it in case of emergency. The repairs will cost around $40,000 (if we do them all). Husband is 73, I am 57. He will probably retire next year (although, he doesn't really want to ever retire.)We couldn't afford to stay here if he retires. Everything is so up-in-the-air and it makes me nervous. Not sure how to proceed. I feel we should use cash.

Jane

Jane, I see that there is not much action here since May. Just wanted to tell you I have been faced with the same decision as you, concerning using l O C or taking out of IRA. As people say the IRA money is in place and upon withdrawal you will be charged additional income tax. Better to take LOC and take tax right off.