December 1, 2004 12:37 PM

12 Tips For Wise Use Of Equity


Excerpt: Before taking a home equity loan, look over these guidelines.    News Source


Before taking a home equity loan, look over these guidelines.

1. Make your mortgage payments a priority. It's your home that's on the line.

2. Don't go with a high loan-to-value product. Lenders who let you borrow more than your house is worth may not be doing you a favor.

3. If you like plastic too much, forgo using a credit card to access a line of credit and get checks instead. Paper is a little harder to let go of.

4. Don't tempt yourself by carrying your home equity credit card or checks with you all the time.

5. Keep some equity freed up for emergencies.

6. Maintain good credit. Banks monitor your payment habits and if they see a change for the worse, they could reduce or freeze your credit.

7. Read the fine print in your loan agreement.

8. If a lender is unfamiliar to you, check with government agencies to see if there have been any complaints.

9. Before you do anything, ask yourself whether you can afford more debt and, if so, how much.

10. If you're out of a job, you could soon be out of a house too if you can't make the loan payments. Investigate other resources -- disability, unemployment, savings, borrowing against a 401(k), stocks, insurance policy or retirement plan -- before you decide to take that risk.

11. If you are going to use the money to make a large purchase, make sure it's something that's going to outlast the life of the loan. Don't put your house on the line for a vacation or new clothes.

12. Don't use home equity loans for day-to-day expenses. Those should be paid entirely out of your current income.



Housing Wealth Reverberates (November 30, 2004)
Homeowners who watch the value of their houses climb aren't reluctant to spend a portion of that growing wealth, pumping about 5 1/2 cents for every dollar increase in home equity back into the economy, a study released Tuesday finds. And while that is the ...
More Mortgages To Be 'Conforming' (November 30, 2004)
Thousands of U.S. homeowners will be able to take advantage of slightly better mortgage terms in 2005 as a hike in the conforming-loan limit will allow mortgage giants Fannie Mae and Freddie Mac to purchase bigger loans. Fannie Mae (FNM: news, chart, profile) and Freddie ...

Read all 15 posts in the same category of Home and Mortgage:

Housing Wealth Reverberates - Nov 30, 2004
More Mortgages To Be 'Conforming' - Nov 30, 2004
Realtors Engage In Turf Battle With Discounters - Nov 28, 2004
Expanding The American Dream Commitment - Nov 26, 2004
'Tis the Season to Fix Up Your House - Nov 26, 2004
Sell Your Home — Fast - Nov 26, 2004
Most Expensive Gated Communities In America 2004 - Nov 26, 2004
Exchanging Real Estate Tax Free - Nov 25, 2004
Home Equity For The Holidays? OK, With Caution. - Nov 25, 2004
Does It Pay To Save? - Nov 23, 2004
The High Earner/Poor Saver - Nov 20, 2004
Six-Figure Zip Codes - Nov 20, 2004
Buyer's Home Feature Preferences Reflect Lifestyles - Nov 16, 2004
Pattern of Strong Home-Price Gains Continues in Most Metro Areas - Nov 16, 2004