What can you tell me about Home equit loans?

Question

In your opinion shoul I get one to pay off credit cards and do minor remodeling to my home.

Answer 1

equity loans,,

you have to pay closing costs, upfront, this can be rolled into the loan.... If you borrow say 50k.. you would have paid in intrest and fees over one year of about $8,000.

So look into a regular loan, at a lower intrest rate... The reason for that $8k number is that you pay about 85% in Intrest only and only about 15% Princial....

Home Equity is the easiest to get cause, they have your house as colatteral, and if you default on your Home Equity loan, they can take your house!!!

Answer 2

why get into deeper debt with yuor house as a collateral risk
a house is not an ATM machine
yet plenty of people sabotage their future in terms of borrowing against the equity of their house for a promise of settling all debts now
that equity is your future retirement money
the other aspect is that many who take equity loan often get into deeper trouble as they have not yet learned to curb their spending habits, and fresh with a clear slate from all debt they often go back spending right up to their credit limits

Home equity loan interest is deductible -- to a point

Those words accompany almost every home equity loan or line of credit solicitation for good reason. Tax regulations allow many people to deduct all or part of the interest they pay on these loans, but there are exceptions. Because of these potential pitfalls, experts say people should educate themselves before borrowing against their homes.

If you have the option to take a home equity loan vs. going out and borrowing money at a higher rate which is not deductible and buying a car, then of course the home equity loan is going to be better.


Thanks to changes in the tax laws dating back to 1986, many people can benefit by moving debt with non-deductible interest -- such as auto and motorcycle loans and credit cards -- over to a tax-deductible loan or line of credit secured by a home. The tax advantage has the effect of lowering the already low equity loan rate even further, making credit cards look like a pretty silly way to manage debt.


For home equity, you can deduct the interest on a loan up to $100,000 regardless of where you use the money.Let's say your children are going to college and you need extra cash. You can take a home equity loan of up to $100,000 and deduct the interest payments on the Schedule A.

The limit applies regardless of whether a borrower has one $100,000 equity loan against a primary residence, or a combination of loans worth that much but secured against two different homes.


Tighter tax restrictions apply to borrowers who take out home equity loans that, along with a first mortgage, raise the debt to a level above the value of the property.

In such circumstances, borrowers can deduct the interest on only part of home equity debt. The Internal Revenue Service determines the eligible debt by subtracting the amount borrowed to acquire the property -- the first mortgage -- from the fair market value of the home.

A homeowner with a $100,000 property and an $80,000 first mortgage, for example, might be able to get an equity loan for $45,000 under a 125 percent loan-to-value program. But the house is worth only $20,000 more than the original debt, so only the interest on the first $20,000 of the home equity debt is deductible.


Equity loans used for home improvement qualify for different treatment, however. They resemble first mortgages for tax purposes. And since people can deduct interest on $1 million worth of first mortgage debt, they have greater leeway than those who use their equity loans for things besides a new deck or garage.

It's called 'acquisition indebtedness -- a loan you get to build your house, a loan to buy your house, or any loan you take out to substantially improve your home.

For instance, someone with a $400,000 first mortgage who added a bedroom wing for $200,000 could deduct all the interest paid. A similar borrower who used the $200,000 loan for college expenses, on the other hand, only could deduct the interest paid on the first $100,000 of the balance.

Answer 3

You can know the detail of home equity loan from
http://homeloans.atspace.com

Answer 4

Your house has to appraise for more than you owe, and enough more that you have equity to borrow from. If your home is appraised for $30,000 more than you owe, you could probably borrow up to $20,000.