Real Estate Information

Luxury Real Estate Information


Rancho Palos Verdes, California Homes
Palos Verdes, California Homes
South Bay, California Homes
Luxury Mexican Beachfront Homes

Featured Properties


Oceanfront Estate Near Trump National

Related Information


Loan Information
Real Estate Information
Mortgage Refinance Information

Home Equity - Don't Spend It on Risky Investments


The housing market has exploded in the last five years, and homeowners are finding that the equity in their homes is greater than it has ever been. The equity in a home is the difference between the market value of the home and the amount still owed on it. As home prices increase, so does the equity for those who own their homes. In parts of California, home values have tripled during the last five years, and homeowners are doing increasingly risky things with their newfound "wealth." Anyone considering borrowing against their home's equity should carefully consider the possible pitfalls of doing so.

Traditionally, most home equity lending was done for purposes of home additions or remodels. These have been considered low-risk loans, as the house is collateral for a loan that improves the house itself. As a bonus, the improvement usually increases the value of the home, making the loan even safer for the lending company. Occasionally, homeowners default on such loans, but the foreclosed property can easily be sold to recoup the loss. Times have changed, and many, if not most, home equity borrowers are now using the money for different, and riskier purposes.

Thousands of people who have suddenly found themselves with hundreds of thousands of dollars of equity in their homes are treating that value as a windfall of cash. Instead of traditional uses, such as home improvements, borrowers are using their equity to buy more real estate to use as rental property. There are cases of individuals with homes valued at several hundred thousand dollars who have borrowed against their equity, bought more property, borrowed against that equity, and repeated this process six, seven, ten or more times, attempting to build up an empire of rental property. It's hard enough for most people to manage one mortgage, but some people who are caught up in the "equity frenzy" are now managing ten or more of them! On the surface, it may appear that these intrepid individuals are simply taking advantage of an opportunity, turning several hundred thousand dollars worth of equity into millions of dollars worth of rental property. On the other hand, these "investors" may be inviting disaster.

As more and more people buy real estate on speculation, the equilibrium of the real estate market is affected. The additional competition among buyers, fueled by the real estate speculators, is causing prices to go up even more. Eventually, the market is going to peak. Buyers who need a home to actually live there can only pay so much for them before the homes simply become unaffordable. And not every speculator can own ten rental properties, as the market can only support so many rental properties before the market becomes saturated. Once that happens, prices will fall. And when they do, all of these buyers who purchased their homes using their own home's equity will find themselves under a mountain of debt.

It's nice to have some equity in your home. It's also nice to be able to borrow against that equity for home improvements or debt consolidation. Using your equity as though it was cash you can freely spend is dangerous, as many speculators will soon learn.

©Copyright 2005 by Retro Marketing.

Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a Website devoted to debt consolidation and credit counseling information and HomeEquityHelp.net, a site devoted to information on mortgages and home equity loans.


MORE RESOURCES:
This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news


Real Estate Happenings
Charleston Post Courier
WHAT: This inaugural golf tournament fundraiser is sponsored by Berkshire Hathaway HomeServices Southern Coast Real Estate, with 100 percent of the proceeds going to nonprofit The Sunshine Kids Foundation (www.sunshinekids.org) providing group ...



Naples Daily News

Real estate briefs
Naples Daily News
Free real estate seminar. Naples' top real estate professionals are holding a public talk to help homebuyers and sellers avoid making common but harmful mistakes. According to local Realtor Jim York, who will be one of the professionals at the seminar ...



Real estate transfers: Reported Oct. 21, 2018
Herald-Whig
Real estate transfers recorded in the office of Adams County clerk and recorder. Quincy area. Russell F. Rohrer, property at 2000 State St., to Elias M. Wigfall and Lachelle M. Wigfall. Melissa R. Hinkamper, property at 1212 N. 20th St., to Melissa R ...



Real estate transfers for Oct. 21, 2018
Roanoke Times
Federal National Mortgage Association to Morris Real Estate Management LLC, 1813 Eastgate Ave. N.E. Roanoke VA 24012, $64,900 10/02/2018. HSBC Bank USA to Victoria L. Epperly, 3401 Birchwood St. N.E. Roanoke VA 24012, $71,000 10/04/2018.



Washington Examiner

Treasury makes real estate a winner of tax law's 'opportunity zones'
Washington Examiner
The Trump administration released the first draft rules for an ambitious plan to provide tax breaks for investment in economically disadvantaged areas labeled “opportunity zones'” on Friday, and real estate appeared to be the big winner. “We want all ...
Opportunity Zones Frequently Asked Questions | Internal Revenue Service - IRS.govIRS.gov
View Interactive Map - ArcGIS OnlineArcGIS Online
REG-115420-18 - IRS.govIRS.gov
Urban Institute
all 163 news articles »


Forbes

Six Skills Real Estate Investors And Developers Need To Develop
Forbes
Being a successful real estate investor or developer requires the unique ability to see an opportunity where others do not. Looking at trends in other successful markets and recognizing those trends elsewhere are key factors in identifying opportunities.



Wall Street Journal

The Bullies of Real Estate
Wall Street Journal
“Bullying is rampant among real-estate agents, but you see less of it among the top-performing agents. The most common form of bullying here is a passive-aggressive running of the clock, which usually happens when buyers and sellers are negotiating ...



Omaha World-Herald

La Crosse County real estate transfers for Sunday, Oct. 21, 2018
La Crosse Tribune
The following are real estate transfers filed in La Crosse County. By law, some transfers are exempt from transfer fees; these properties are listed without prices. Bangor. Matthew and Tyffany Gasper to Kory and Olivia Freeberg, 2107 Henry Johns Blvd., ...
Residential real estate transfers, Oct. 21Omaha World-Herald

all 2 news articles »


Real estate transfers
The Steubenville Herald-Star
St. Joseph Monastery to Maria Benavides, lot 46, Becker Highlands. Charles McIlvain to Robert and Megan Knutsen, 9.509 acres, Mount Pleasant Township (survivorship). Melissa and Robert Supanik to Jared Bloom and Kathryn Shook, 0.219 acre, Warren ...



Bloomberg

The Latest Real-Estate Business Is Storing Rich People's Cars
Bloomberg
It's easy enough to build a basement cellar for your collection of Lafites and Latours or clear some wall space for your Richters and Basquiats. But try finding room for a dozen or so vintage Ferraris, Porsches and Plymouth Barracudas. In this dilemma ...


Google News

home | site map
© 2006 TIGER MEDIA