topic Re: Home Equity in Home

Home Equity

Shiloh09 — Fri, 13 Mar 2015 02:16:50 GMT

I am looking into a home equity line of credit or a home equity loan. If you have experience in either of these two options, will you let me know? I am a bit nervous about this...

Re: Home Equity

VaBelle35 — Fri, 13 Mar 2015 02:30:26 GMT

I have a line of credit. I took it out right at the start of the economic crisis, around 2009.

I wanted to have the access to the equity in my house should I lose my job (before I lost my job when I still qualified for the line of credit). Luckily I did not. Over the years, the credit union has lowered and raised the amount of the line based on economic factors.

I like having the peace of mind knowing it's there should I need a new roof or HVAC system or something super expensive. I will have the option of using savings or using the line of credit depending upon what's going on at the time.

Re: Home Equity

Lynnj — Fri, 13 Mar 2015 02:35:27 GMT

The line of credit is like a 2nd mortgage. It uses the equity from the value of your home. So your home needs to be worth much more than what you currently owe on the current mortgage. Since it's like a 2nd mortgage, you can write off any interest from the line of credit on your annual tax returns. Just like you write off the interest on your current mortgage. So you do get a tax benefit from a lime of credit. A home equity loan is a loan, and works like any other loan. No tax write off for interest on a loan. This too is like a 2md mortgage, and really acts like one. Since it's a loan, with no tax write off benefit, it's as if you are carrying two mortgages/loans.

Re: Home Equity

GCR18 — Fri, 13 Mar 2015 02:40:17 GMT

I had a home equity loan around five years ago. I ended up not feeling comfortable with the lean against the house and paid it off quickly.

Re: Home Equity

Shiloh09 — Fri, 13 Mar 2015 02:47:42 GMT

lynnej---good to know about the tax write off...thank you all for sharing

Re: Home Equity

Donnalona — Fri, 13 Mar 2015 02:52:54 GMT

I have my Home Equity Line of credit for 15 years now. I highly recommend it only if used wisely meaning if something goes wrong with the home or car that is costly. Most of them have adjustable int rates so keeping the balance affordable every month is important. We needed a new roof 5 years ago and it saved us because we were able to keep the 10K in our savings and pay off the HELOC over time. My husbands transmission went on his car was another time. But remember it is considered a second mortgage which needs to be paid off as well as the first so use it wisely because debt sticks.

Re: Home Equity

Snowpuppy — Fri, 13 Mar 2015 03:28:16 GMT

Depends on what you need to use it for?

As a 2nd mortgage the interest is deductible but the line of credit can vary as the market changes.

It is a lien against your primary residence. Never had one myself, nothing against them I just didn't feel comfortable.

You may qualify for some other financing options with better terms.

Re: Home Equity

VaBelle35 — Fri, 13 Mar 2015 10:52:12 GMT

My line of credit has a zero balance and I was able to refinance the home without having to get rid of the line of credit. I think it's $20k now (they keep raising it as the value of the home goes up as the city keeps raising the value so they don't have to increase the tax rate ;o)

Re: Home Equity

tracytracy — Fri, 13 Mar 2015 11:00:43 GMT

Which one you choose depends on your individual circumstances and your reason for needing the loan. A reputable loan officer can help you work through the options. Both are tax deductible.

Re: Home Equity

Shiloh09 — Tue, 17 Mar 2015 01:38:06 GMT

Thanks all. I need to have the house and garage painted or sided with Hardie Plank first and then my pitiful tiny tiny master bathroom. So it really is going back into the house.

Re: Home Equity

OnlyShopsOnline — Sun, 22 Mar 2015 04:48:58 GMT

Unless it was for an emergency of some sort, I wouldn't take a home equity loan without the funds to back it up. If you default, they will come after your house much more quickly than if you have issues paying your standard mortgage.

We took one a few years ago. The interest rate was 3.5%, and we get back 30% of that in tax savings. So, that's pretty cheap money. And, our invested money earned more than that over the past few years. We used it for home improvements. And, we did have the invested funds, so there was no fear of losing our home in case of some unexpected "event."