Don't use your home like an ATM.

By Wayne B. Pruner

http://www.yourhomeinportlandoregon.com/

Wayne's Portland Oregon area Real Estate blog

www.activerain.com/waynepruner  

I have noticed a trend here in Portland Oregon, however, I suspect that is happening elsewhere also.  People are refinancing the equity in their homes and spending it on every day living expenses. When the local real estate market takes a big jump, they refinance.  I know of people who have done this two or three times.  This shortsightedness can have long-term effects.  I believe that one of your paramount financial goals is to have no personal mortgage payments when you retire on a fixed income.  At retirement, your quality of life will be diminished if you have to take mortgage payments and everyday living expenses from a fixed income.

I know many people over the age of 50 who are getting 30 year mortgages.  How comfortable are you going to be, if you have a house payment of $2500.00, or more,  plus property taxes, when you are 75 years old?  People are going to be into debt well into their old age.

The only valid reason to tap into your equity is to remodel your house, because you are going to live there for a long time and the family needs more space.  If you do refinance to pay off high interest purchases and credit card bills, you had better change your spending habits so you don't get in that situation again.

Credit is very easy to get nowadays.  People need to exercise the fiscal responsibility to manage credit properly.