If she can sell with a small loss, and move to a condo that is cheaper than the house she has now (dont forget to factor in how much that hour commute costs!), she may be better off to just sell as-is at a loss and move on. Definately better to do this than to keep borrowing and throwing money into the house. I doubt that the housing market is going to rebound anytime soon. Sometimes it is better to cut your losses and move on. I did this last year and it has given me incredible peace of mind...
That being said, she may be able to join a credit union who can probably give her a loan with a short term payback period which would be better than a longer term commercial home equity loan. My credit union will write small home equity loans with specific payback periods of whatever works. They are very flexable. I could borrow $3000 and pay it back in 6 months if I wanted, at a fixed interest rate. Maybe something like this would work for her.
Often it is cheaper long run to fix up, reglaze, weatherstrip, and storm window the windows you already have than to replace. Replacement windows rarely end up paying for themselves.
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