You keep hearing about home equity loans. The bills
are out of control and you need a new car. "Maybe we can get a new carpet
and paint the house", you say to yourself. And, you keep hearing about
home equity loans. These are just a few reasons why home equity loans
can seem like the solution to all your problems and are so popular.
Home equity release
Home equity loans can be a fantastic way to start your own business
or to take advantage of an investment opportunity. They can also
make your situation worse than it was before you got the home equity
The reason's for taking advantage of home equity loans are the most
important part of the process. Take the time to sit down and ask
yourself, "Do I really need a home equity loan? Do I want to go
on a spending spree or am I really trying to improve my life?"
A Home Equity Loan is like having a second mortgage.
Suppose your home is worth $200,000 and you have a mortgage against
it at $150,000, you will have $50,000 of equity available. Home
equity loans allow you to borrow up to 80%, and sometimes more in
certain situations, of your home value. In this situation you could
borrow $80,000 as a home equity loan and still have only borrowed
This is why it is so important to take a good look at your situation before
making a decision. You can see how easy it could be to get carried away
with home equity loans.
A Home Equity Loan summary
Let's say you only need $20,000 for that new car and some home improvements.
You decide to borrow another $15,000 of equity for that vacation to Hawaii
you have been dreaming about.
First of all, a vacation to Hawaii would not cost $15,000 unless you
went on a first class, spare no expense vacation.
Do not risk your home equity to buy a new car or boat.Using a home equity
loan to buy a car may not be a great idea with today's 0% interest rates
and no money down loans. There is no sense in risking losing your home
to buy a new car with these type of loan programs that are available
in todays market.
Home equity loans should be used for projects that will add value.
On the other hand, a home equity loan for home improvements may be a great
idea. This will add value to your home as long as you can afford the higher
A business that's doing great that you want to expand may be another good
use of a home equity loan. As long as the business is already in profit
and is not losing money.
|Some solid investments can
be a good idea if you have done your research before hand. The latest
IPO may or may not be a great idea.
Consolidating high interest credit cards may be a great idea as
long as you close the accounts and don't run them back up. You really
only need one or two credit cards in case of an emergency.
Educational expenses may be a good reason to take a home equity
loan to get your children started in the right direction. Someday
this type of an investment can pay off.
These are just a few things you can do with home equity loans. It's
very easy to borrow too much, only to find yourself having a tough
time making the new payments.
The important thing to remember with home equity loans is to be
logical and don't let your emotions get the best of you. Again,
take the time to sit down and research all your options. This way
you can rest well at night and not have to be concerned about losing
your home. You can enjoy the things you do with your home equity
loan knowing you've made a wise decision.