6 deadly sins of home equity: 6 Deadly Sins of Home Equity PART 5
- 03/04/09 05:36 AM
4. To invest Don't even go here. Buying stocks and bonds with savings is investing. Buying them with borrowed money is called gambling, and if you ante up with home equity money, it's gambling with your house.Of course, gambling is popular. The Federal Reserve Board found that in 2001 and the first half of 2002-the most recent period it reviewed-11 percent of mortgage refinancing funds were put into stocks and other financial investments. That's up from less than 2 percent during the two years prior.Here's the problem: Interest rates on home debt are hovering around 4 to 5 percent for a … (0 comments)
6 deadly sins of home equity: 6 Deadly Sins of Home Equity PART 3
- 03/04/09 05:31 AM
2. To pay off a credit card The average American household owes $9,840 in credit card debt, but I have met people who owe their entire annual income or more-often at a double-digit interest rate. To these people, a home equity loan looks downright reasonable.But if they haven't mended their spendthrift ways, a home loan won't help them. A study in the late '90s found that nearly two-thirds of those who took a home loan to pay off credit cards resorted to their cards again within two years.The worst-case scenario gets uglier. Home equity loans are "secured debt." Should you file … (0 comments)
6 deadly sins of home equity: 6 Deadly Sins of Home Equity PART 2
- 03/04/09 05:28 AM
1. To buy a carI cringe when homeowners say, "I paid off my car loan with a home equity loan." First, I need to point out: You have not "paid off" the car loan. You've only shifted the debt to your house, thereby increasing the liability on what may be your biggest asset.If the interest rates on both loans are about the same, the home loan might save you a few hundred dollars when you figure in the tax deduction.But there's a catch: Most home equity lines of credit carry a variable rate-when some financial benchmark like the prime interest rate … (0 comments)
4. To invest;)
;)
