The huge run-up in property values
over the last several years has had
a predictable outcome ~ homeowners
seeking to make use of their
well-deserved profits without
actually selling their house. By
example:
Bob & Carol, and Ted & Alice, paid
about $85,000 for neighboring homes
in 1985. Both couples still
have about 10 years remaining on
their mortgages, with $600 principle
& interest payments. Today
similar homes in their area sell for
$300,000 ~ which is great in theory
but doesn't benefit them much unless
they wish to sell, which they don't.
And probably never will.
So one option available that allows
them to reap the reward of their
home investment is a home equity
loan. With $215,000 in home
equity they can get take some of
that money out right away, and use
it to enhance their standard of
living to one befitting someone with
almost a quarter-million dollars in
assets.
My advice to borrowers is simple:
don't be too eager, and don't be too
greedy! But if you take care
to make your new payments
affordable, and you spend the money
wisely (a child's tuition, or yes, a
new car for you), then I'm a strong
advocate of home equity loans.
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