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You do not want or need a second mortgage to finance your home theater.
You don't need to refinance your mortgage to get the cash for your home theater. You should refinance to reduce rates and save money long term.
More importantly, you don't want long-term debt for equipment that won't have a matching lifetime.
For your home theater, whether it is the AM/FM/DVD/CD/amp/speakers audio system, or the big-screen television -- plasma, LCD or rear-projection -- either buy it with cash or buy it with a short-term loan that will be far shorter than the life of the equipment. Far shorter? Yes, you may get upgrade fever somewhere along the line, so you want to have the older equipment paid off at that point.
Another good choice is to use a money-back credit card, such as the Discover credit card, although many banks now offer rewards programs -- including cash back -- for Visa and Mastercard credit cards.
However, similar rules -- finance your home theater with a short-term loan. If you charge the purchase, get your "cash back" bonus and then pay off the credit card. Don't buy it on credit if you're only going to make the minimum payment -- same issue -- you will want to upgrade or change or add equipment before this system is paid off.
Many custom audio & custom video shops have already arranged special financing for their customers for such big-ticket items. This financing helps them sell the equipment, just like auto dealers, who have pre-arranged several different financing options.
Even the "big box" electronics discount stores often have special financing deals for their big-ticket items. Sometimes it might be an easy application process at a competitive rate. Other times, they might offer a "90-days same as cash" deal or even a "no finance charges for a year" deal.
Any time you find a deal like that, it means that the dealer is "selling the receivable" to a finance company. He is giving the finance company 10% or more of the proceeds.
Under those circumstances, the dealer will often offer you the same deal if you ask for it. I even found one store chain, although it wasn't an audio/video chain, that offered the 10% off even if I charged the purchase. This is really strange, as they were going to pay 4-5% to the chargecard company -- or maybe it was a result of some of the "you can not offer a discount for cash versus using our card" rules that enabled this windfall for me.
Check into the options offered by your chosen dealer, even if you have cash in hand for the purchase. If you choose to charge your purchase, charge it on a card that will give you cash back!
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Copyright © 2005-2008 Terry Stockdale. All rights reserved. |
