Need advice on financing RV

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Topic Author
RMD3819
Posts: 64
Joined: Wed Mar 27, 2013 3:40 pm

Need advice on financing RV

Post by RMD3819 » Sun Feb 01, 2015 10:15 am

Next year I will retire at 54 and wife and I will hit the road full time in an RV. We will sell our house.

I have a couple of financing options and would like some thoughts.

The RV will be around $250K. RV financing seems to be around 4-5%.

We are buying the RV and putting the paid for house (conservative $600K) for sale a few months before retirement because if the house sells quickly we can live in the RV. The most ideal situation is we pay off the RV with house proceeds especially if it sells fast.

The other option is I will get a $400K pretax lump sum at retirement that I need to roll over or cash out all or partially (and pay taxes). I could pay the RV with that. This is not our only retirement money.

The third option is we simply continue to finance the RV until the house sells.

We have sufficent income to live this lifestyle. I hate financing things. We have no other debt except $20K car loan and $500/month for Life Insurance and LTCI for the both of us. Health insurance taken care of. No cc debt.

Thoughts?

curmudgeon
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Re: Need advice on financing RV

Post by curmudgeon » Sun Feb 01, 2015 1:56 pm

Personally, I would not cash out a large lump sum from pre-tax; that will push you into highest tax brackets for the year. If you are selling the house, then either just finance the RV until it sells, or possibly take out a Home Equity loan (but HELs may have extra fees associated if you turn around and sell the house quickly). While it may be annoying to need to take out a loan that you don't really need, for a short term it's not going to be that big a deal; just make sure there aren't prepayment penalties.

You might also want to pay attention to state income tax rates. I understand a lot of full-time RVers choose specific states as their official state of residence to limit income tax and property tax on the RV (I think I've heard South Dakota is popular, but I don't know details).

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rustymutt
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Re: Need advice on financing RV

Post by rustymutt » Sun Feb 01, 2015 2:23 pm

curmudgeon wrote:Personally, I would not cash out a large lump sum from pre-tax; that will push you into highest tax brackets for the year. If you are selling the house, then either just finance the RV until it sells, or possibly take out a Home Equity loan (but HELs may have extra fees associated if you turn around and sell the house quickly). While it may be annoying to need to take out a loan that you don't really need, for a short term it's not going to be that big a deal; just make sure there aren't prepayment penalties.

You might also want to pay attention to state income tax rates. I understand a lot of full-time RVers choose specific states as their official state of residence to limit income tax and property tax on the RV (I think I've heard South Dakota is popular, but I don't know details).

+1 Don't tap your retirement advantaged accounts to make this purchase. Unless your plan allows for loans, paid back after a period of years. I did that twice in 25 years, and got lucky with the results.
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Userdc
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Re: Need advice on financing RV

Post by Userdc » Sun Feb 01, 2015 7:50 pm

Have you looked into a HELOC? Might be a lower rate than the RV loan.

Topic Author
RMD3819
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Joined: Wed Mar 27, 2013 3:40 pm

Re: Need advice on financing RV

Post by RMD3819 » Sun Feb 01, 2015 8:27 pm

Doesn't that require closing costs and appraisals and all that?

The house is paid for. I can't see getting a HELOC mixed into the house when we are trying to sell it.

Thanks for the idea though.

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Toons
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Re: Need advice on financing RV

Post by Toons » Sun Feb 01, 2015 8:30 pm

"The third option is we simply continue to finance the RV until the house sells."

I would use that option ,then once the house is paid off,pay off the RV loan,happy travels :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Padlin
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Re: Need advice on financing RV

Post by Padlin » Sun Feb 01, 2015 8:47 pm

If you do finance it, look into it well before you retire, I found the bank would not give me a Home Equity Loan as I had no income. That I owed nothing to anybody and had plenty in investments didn't matter.
Regards | Bob

obgraham
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Re: Need advice on financing RV

Post by obgraham » Sun Feb 01, 2015 11:10 pm

Retired here, not working.
Recently took out a HELOC for essentially the same reason, to float some cash to buy an RV and remaining flexible for taxes.
It was no problem at my local community bank. They didn't care that I've no job. Cost all of $60. No other charges to open or close it. If the house were to sell, the HELOC would be paid off at closing, just like any other real estate closing where there is an existing lien.

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