Home Equity loan/ should I or shouldn’t I?
Question: Hi everybody. I’ve been toying with
the idea of a home equity : loan for YEARS now. Here I am again considering it, but why does : it seem to me that home equity loans are too good to be true. : I keep seeing all these companies the last few years trying to : shove equity loans down people’s throats and while the reasoning : is sound if you have higher interest bills to pay off, I can’t : help but feel that there must be something inherently wrong with : this if so many sleazy people are jumping into the industry. Does : anyone have any advice or experience with this?
Answer: The home equity business took off when the federal income tax interest deduction for unsecured loans was dropped. No surprise, most people like the extra tax deduction. As for it being a good idea, it depends on what your plans are for your house in the next few years. If you are planning on staying there for several more years, if can be a good way to pay off existing debt at a lower interest rate. We did this several years ago. The drawback is, if you sell your house before the loan is paid off, this loan must be paid off at closing. Ours was not paid off, yet I still feel that it was worth it, because we did save substantially on interest.
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