Wednesday, August 22, 2007

Financial Planning Question of the Week

Feel like testing your financial planning expertise? Here's a real-life question I had recently...give it a shot.

A client is buying a new vacation home and selling an existing second home. She will need about $200k for the down payment next month and should be able to pay it back in 3-4 months when her existing second home sells. She is in the 35% federal tax bracket, 9.3% state and not subject to AMT. What's the best way to raise the money?

a) A home equity line of credit on her primary residence at 8.25%
b) Liquidate investments and pay capital gain taxes of $8k-10k
c) Take a $200k margin loan at 9.125%
d) Take a swing loan at 7% on the present second home

Take your best shot!

1 comment:

Cristiana Alexa said...

In my opinion the best answer was c).