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Barn Renovation Update

October 6th, 2015 at 07:57 am

I've blogged a few times about our barn renovation project.

We did get a bid from our plumber - $1,400 to dig a 170 ft. trench from the house to the barn, run a water line from the house to the barn, and hook up a hydrant at the barn. The total projected cost is about $16,000.

The first time I blogged about this, a handful of you suggested we have our kids pick up some of the cost, as the renovation is really about keeping their 4-H and FFA projects going. Between the four kids, they have about $7,000 is savings. What we've decided to do is borrow some money from the kids, and pay them back over time at no interest. DW and I both think that's the right thing to do.

We have applied for a loan for the balance of the costs. I hope to hear back about loan approval this week. Here's a Cliff's Notes (do they even use those anymore?) version of our loan.

Some of you who have been here for a while may remember that we took out loans from two family members to renovate our house ago. Even though we have been paying on the loans faithfully each month, it's not a great situation owing money to family members. We would like to get one or both of them paid off as soon as possible. We owe my mother and father-in-law about 17K, and my aunt about 13K.

The loan we've applied for is up to 38K. The original idea was to use that money to pay off my in-laws, and use the balance to renovate the barn, and borrow only what was needed - about 33K - we applied for the loan before we had many bids in for the renovation. The loan would be amortized for either 5 or 6 years, depending on how much we actually borrowed. Paying off one of the loans would also free up some cash flow.

Now that we've had this idea about borrowing some of the money from the kids, it seems to me that we can pay off both sets of family members, and also renovate the barn.

Yes, that will cost us interest, and we will be extending the total loan out longer, but we will feel better having my in-laws and aunt all paid off.

So, for right now, that's the plan.

4 Responses to “Barn Renovation Update”

  1. creditcardfree Says:

    Seems like a good plan to me considering everything. You never know, it could get paid off faster!

  2. snafu Says:

    Are you feeling pressure from family members to payoff loans? Are they in need of a large sum of money? Do they make snide remarks about your spending choices? I'm puzzled as to the benefit to you of borrowing to pay off existing loans unless you can get a far lower interest rate and avoid all those closing costs. If you borrow from a CU do you get a rebate from profit sharing?

    As I see it, the bar resets whenever you re-mortgage and interest scoops up most of the monthly mortgage payment. I hope you'll run the numbers to see exactly what this change will cost you over the long term.

  3. Bob B. Says:

    Thanks for that reminder, snafu. No, there is no pressure from family members to pay off the loans - only self imposed pressure.

    At a minimum, one of the loans will need to be transferred over to the new loan, to create more monthly cash flow. As for my Aunt's loan, it can wait.

  4. livingalmostlarge Says:

    I agree sometimes it's nice not feeling like you owe a family member. Do it. You aren't refinancing the house but this is a HELOC? Or just a secured loan?

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