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Your Home Equity Can Work for You
"Use your home's equity to pay off your debt. It's easy and simple, no closing costs!" Every time I turn on the television, commercials bombard me telling me to take out a home equity line of credit. People are using their dream homes to pay for even bigger dreams, like a "debt free" lifestyle and college educations for their children. Despite the ease in securing these seemingly beneficial lines of credit, many CPA's and financial planners are cautioning homeowners to gain a full understanding of how these lending options work before they turn their homes into a source of money. There are two options in using your equity to secure funding: a home equity loan or a home equity line of credit. Most lenders will let a homeowner borrow up to 80% of existing equity based on the amount owed on the first mortgage and the appreciated value of the home. Unlike other forms of nondeductible consumer debt, loans less than $100,000 or less that use a home as collateral may have a tax deduction available for interest paid. A home equity loan is most usually used for large purchases, such as financing a major home improvement project, starting a business, purchasing a luxury item or consolidating high-interest credit card debt. There are advantages to securing lending for these purposes, but these types of loans are better suited to those who don't foresee future borrowing needs. Home equity loans are basically second mortgages, which provide you with money that is repayable over a fixed term from five to 15 years. These loans can feature locked-in rates and monthly payments that remain the same. Home equity lines of credit are ideal for use as emergency money. They can be used for irregular or unanticipated expenses like medical deductibles and automobile repairs. These lines are often used by higher income families who don't qualify for college financial aid to pay for their children's college educations. When faced with using a home equity line of credit or savings to pay off credit card debt, it is advised to use the savings to pay of the debt and the line of credit for future emergencies. With home equity lines of credit, you are approved for a certain amount of money, a credit limit. You can borrow any amount of money during the life of your line of credit up to your credit limit. You may be given a check or a debit card that can be used at almost all retailers. Home equity lines of credit are usually variable-rate loans. Using the equity in your home is not a flip decision. Think about it seriously. If you are doing this to consolidate high-interest rate credit cards, it will only work if you do not accumulate any new debt. If you keep using the cards, you are only digging a further pit of debt. Your credit card company cannot foreclose on your home, but your home equity loan lender can. You are placing your home at risk with every mortgage placed on it. It is necessary that you shop for the best rates and terms available. Talk to different lenders and be aware of introductory rates. Read all paperwork carefully before you sign it. Using your home equity can benefit you in many ways, but always display caution. It is still debt Martin Lukac, California mortgage Lender(http://www.martinlukac.com), provides mortgage financing for purchase,refinance,bad credit and more. Request a free quote or ask a question.
MORE RESOURCES: Landmark Settlement Breaks Up the Real Estate Cartel The American Prospect Top real-estate CEO sees decades of housing pain ahead: 'What the Fed did will have a 30-year tail on it' Yahoo Finance Commercial Real Estate's Systemic Threat: Separating Fact From Fiction Commercial Observer Rules that helped set real estate agent commissions are changing. Here's what you need to know The Associated Press Refined Real Estate: Historic Queen Anne Polson House lists for $6,950,000 seattlerefined.com Luxury's Latest Battleground: Real Estate | BoF The Business of Fashion The Realtors' Big Defeat The New York Times Local real estate agents face uncertain future with new negotiation rules WJHL-TV News Channel 11 Investigation underway after 44-year-old real estate investor seen on video firing shots off boat docked at Lakeview ... WSVN 7News | Miami News, Weather, Sports | Fort Lauderdale Will March bring more madness to Craven County's real estate market? New Bern Sun Journal Rules that helped set real estate agent commissions are changing. Here's what you need to know Lufkin Daily News A luxury agent on how the NAR settlement will change his business The Washington Post What National Association of Realtors agreement means for Texas real estate KAMR - MyHighPlains.com Rules that helped set real estate agent commissions are changing. Here's what you need to know KXLY Spokane Cities Face Cutbacks as Commercial Real Estate Prices Tumble The New York Times National lawsuit could shakeup housing market, cut into real estate agent commission 11Alive.com WXIA Swimmo Invest Opens up a New Chapter in the Real Estate Industry Markets Insider Realtor group will pay $418M to settle commission lawsuits The Associated Press What Seattle-area homebuyers should expect after national settlement The Seattle Times CrewBaltimore’s mission to accelerate women’s success in real estate Afro American Newspaper Realtors settlement to lower home sale costs, alter commission structure - The Washington Post The Washington Post Realtors Reckon With a Seismic Shift to How They Get Paid The Wall Street Journal Settlement will affect Iowa homebuyers KCCI Des Moines Israeli real estate event: Legal complaints escalate NorthJersey.com What the death of the 6% real estate commission means in D-FW The Dallas Morning News China's Real-Estate Market Just Set a Record—but Not a Good One The Wall Street Journal Making Sense of New York's Confusing Luxury Home Market The Wall Street Journal Real estate commissions, unassailable for decades, could crumble after landmark settlement The Denver Post A commission settlement may affect housing market 9News.com KUSA Rules that helped set real estate agent commissions are changing. Here's what you need to know Northeast Mississippi Daily Journal Is the Era of the Celebrity Real Estate Agent Over? Industry Reacts to Settlement That Could Slash Commissions Hollywood Reporter Illinois real estate: Home sales in Peoria, Tazewell, Woodford counties Peoria Journal Star Pension funds snap up real estate at steep discounts Financial Times Bay Area Real Estate Executive Charged with Wire Fraud, Identity Theft in Investment Scam - Hoodline National Association of Realtors Agrees to Slash Commissions to Settle Lawsuits - The New York Times Foreclosures Are Rising—Especially in This One State—but Not for the Reason You Might Think - SFGATE Once America's Hottest Housing Market, Austin Is Running in Reverse The Wall Street Journal Rules that helped set real estate agent commissions are changing. Here's what you need to know News10NBC Realtors Reach Settlement That Will Change How Americans Buy and Sell Homes The Wall Street Journal Real estate lawsuit settlement upends decades-long policies that helped set agent commissions WQAD Moline Chicago Voters Face Choice on Tax to Fund Homeless Programs The New York Times Manhattan Real Estate Update westsiderag.com The NAR Settlement's Impact On Commissions And Home Prices Financial Samurai End of 6% real estate commissions could mean lower home prices The Atlanta Journal Constitution A Look Into the Future of Home Buyers' Agent Commissions The Wall Street Journal National Association of Realtors to cut commissions to settle lawsuits. Here's the financial impact. CBS News Bridgemarq Real Estate Services (TSE:BRE) Share Price Passes Above Two Hundred Day Moving Average of $12.93 Defense World Blackstone, World's Top Alternative Asset Manager, Eyes Record Highs Amid Real Estate Bottom Investor's Business Daily 4 Ways a Settlement Could Change the Housing Industry The New York Times Real Estate Stocks Drop As NAR Agrees to $418 Million Settlement Markets Insider Colony Ridge violated deceptive trade practices, Texas says The Texas Tribune Agent Migration and the Power of New Mike DelPrete Antitrust ruling rocks real estate: Buyers brace for shift in commission structures Straight Arrow News |
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