"The toughest thing about success is that you've got to keep on being a success."Irving Berlin
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Home Equity Lines of Credit
Alright, you've been a homeowner for some 10 years now, and you've decided it's time for improvement and expansion. What is the best way to obtain the funding for home improvement projects? A home equity line of credit is often the most feasible and ...
Home Equity Loan Vs. 401(k) Loan -- Which Should You Choose
You've finally decided to add that patio you've always wanted to your home. Now you can enjoy barbecue outdoors and get a little fresh air every now and again. But how are you going to pay for it? If you're like most people, you don't have cash for ...
Student Loan Debt Cannot Be Wiped Out Through A Bankruptcy Filing
Recent legislation passed by Congress has brought about the most sweeping changes in U.S. bankruptcy law in twenty five years. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 will eliminate the opportunity for most Americans with debt ...
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About five years ago I moved from the ranks of being a renter to that of being a homeowner. Now, not a week goes by that I don't receive some type of offer through the mail encouraging me to refinance my mortgage, open a home equity line of credit (HELOC), or apply for a home equity loan.
Payoff High Interest Credit Card Debt! Lower Your Monthly Payments! Buy A New Car! Refinance And Get Money Now! scream the slogans splashed across the envelopes.
The promotional letters inside point out how easy it will be for me to “get the extra cash you need NOW!” They promise “no out of pocket costs” with a newly refinanced 30-year loan.
Could I use some extra cash NOW? You bet I could! Who needs high interest credit card debt? Not me, no way, no how! Buy a new car? Hmmm, I like that new Pontiac G6 I've seen on tv, maybe in a sleek titanium color with black trim?
For thousands of U.S. households “Home Sweet Home” is rapidly being replaced with a new sentiment - “Home Sweet ATM.” According to the latest Federal Reserve study, 45% of homeowners who have refinanced their mortgages pulled cash out and 74% wound up lengthening their mortgage by about six years. Only 17% shortened their loan term opting to downsize to a 15-year mortgage.
In a period of six years, Americans have more than doubled the amount owed on home equity loans and lines of credit, nearing $766.2 billion, according to the Federal Reserve.
If you're in your 40's and you refinance on a new 30-yr. loan, you'll be in your 70's by the time your loan ends. Even if you shave off a few years by paying down your principle, you're still risking not owning your home “free and clear” as you approach retirement age.
What happened to the era when your home was considered your nest egg to be used only for life-threatening or life-changing events like paying for a child's wedding or for a medical emergency? And worst of all, many new homeowners are using their home's equity as another source for financing new debts.
Think twice before using home equity to pay off credit card balances. If you're already overspending on your credit cards now, what makes you think anything will be different after you pay them off with a loan or line of credit? Many people just wind up deeper in debt or facing bankruptcy because they couldn't resist charging their cards up again.
Keep this in mind before tapping your home's equity - Your loan or HELOC is secured by your home. Default on the loan and you could lose your house, even if you declare bankruptcy!
The best use for home equity is to make improvements that add value to your home. Remodeling a kitchen or bathroom, adding an extra room or creating a master suite are just a few of the “hot” improvements that can really pay off when it comes time for you to sell.
If your home truly is your nest egg, be smart about how use its equity. Make sure that it fits in with your overall financial plan and golas. Otherwise, you could be left without a nest and just the egg!
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