DIY the repairs on a cash basis.

I cannot advise on the loan situation, but I would note that the last response was flippant and cavalier to the point of rude. Not everyone or every problem can be diy-ed. I would imagine replacing the propane heater/air conditioner unit on the roof of my 3 story house would be a very possible, loan requiring, not diy-able repair for instance (as, at the very least, I do not hold a crane license or propane contractor license in my state).

We have been doing them on a cash bash basis and the repairs we weren't able to do on our own we hired out and paid cash. Problem is the our eves and gutters are leaking and going into my foundation causing it to crack and the attached garage to separate from the house. When we first bought we hired someone to fix it and the guy was licensed and insured and gave a 5 yr guarantee on his work. His work failed! I had him come out to look at it and his answer was oh.... I didn't fix that part which was BS! Now he won't answer my phone calls and if I don't get this fixed ASAP I will have major structural issues.

my suggestion is to pay off the current loan and include the repairs needed with a single mortgage. your total payment will be lower and you can continue to pay extra.
have any of these lenders pulled your credit yet?
the local bank probably is a correspondent to a larger bank which may have "overlays". these are extra rules above and beyond the standard guidelines. I would ask them.
NFCU and USAA and both good options

No our credit has not been pulled yet. In the area where we live the local banks and credit unions do not base giving you a loan on your credit score. It is very different here than other places I have lived. They actually give loans in house based on income and your recent payment history and if you are established with them. They are true hometown banks the offer options like I have never seen. They are not part of any larger banks.... not the ones I have been speaking with anyway.

if you can't do as holly suggests and borrowing money is the only way to do much needed *must do now* repairs (like a furnace), I would prolly borrow the least amount I needed and go with the lowest monthly payment. It would prolly mean a higher interest rate, but for all those financial concerns you mentioned (many of them, I'm the same way), it may be the best approach at the moment. Sounds like you want to keep monthly $ payments low in order to do the 'live off of one income' thing. (We did that too). Your homeowners insurance and R.e. Taxes will increase over time so monthly payments will go up over time. FYI-it appears you have a good head on your shoulders...good luck in making a decision that works best for you and your family.

The one thing I will adamantly say is do NOT, I repeat, do NOT get an adjustable rate loan!
These loans were one of the major causes of the housing crash.
You want to know from payment one to payment 180 how much the monthly bill will be. Because I GUARANTEE interest rates WILL rise. They always do. And what happens if in 5 years mortgage rates are 9% again? In the late 70s mortgages were 18%!!

An adjustable rate will have a cap, it will not jump from 4 to 9 or 18. Not saying you should get one, but they don't just double and triple over night. Fixed is more secure for the long term.

It is really hard to decide; my rule of thumb has always been, which will require the least out of my pocket in the long run?

Without doing all kinds of calculations (that I can't do, but I believe that there are websites that can calculate it for you) I can't say for sure. There are advantages to the fixed rate refi, especially lowering the interest rate on your original balance; but could you get a lower rate and less out of pocket from a HELOC, paying it off first with the same discipline that you have been using?

Have you talked to a credit union? I did take out a HELOC from my local credit union in order to pay off my mom's condo loan; there were no closing costs, fees, etc and the lowest interest rate in town. That was before the crash -- and it was long ago paid off, so I don't know if such a good deal might still be available.

Don't know what repairs you need, but some large companies (hvac, roofing, siding) will offer low cost financing too -- you have to read the contract very carefully to be sure that you are getting what was promised.

I would never recommend a second mortgage. The home is your security as in roof over your head with no payments when you retire. If you need a new roof or the driveway is caving in, etc. and can't afford to pay cash.......get a loan for that job only. When you retire without a pension or with a mortgage you can end up in a financial mess. You can not live on social security and may end up in a low income area.

This post was edited by EmmaR on Mon, Dec 1, 14 at 21:10

I would go with a HELOC and only borrow the money as you need it. If you get approved for a $30,000 HELOC, that doesn't mean you need to borrow $30,000 tomorrow. You can start slow and phase the improvements based on necessity and comfort in the borrowing.

Another really good way of "financing" certain home improvements (I'm not sure what type you need) is buying certain items at "big box" stores Ie. Home Depot, Lowes, etc. they almost always have 12-18 month interest free financing on purchases, maybe you purchase and depending upon your comfort in diy projects, hire someone to install after you make a purchase. This could potentially work. Just be certain that you pay off these loans BEFORE the time period expires or you will be paying accrued interest!