Across America people are again tapping into their homes for cash by using them to secure a loan. Called a HELOC, or home equity line of credit, this is part of the reason so many Americans suffered during the mortgage crisis.
It is highly recommended that people don't go this route, as it puts you in a place that will lock you into the home for a long period of time.
One major reason is because if the price of the home falls again, as it did during the mortgage crisis, you won't be able to sell your home if you want to because you will owe more on it than someone wanting to buy the house could secure a loan for if the value of the home falls.
The other obvious reason is you lock yourself into a higher mortgage payment for a significant period of time. If the economy falters, as it has for several years, you could easily lose a job or hours, which would make it difficult, if not impossible, to make your payments.
Even though there is some relief, setting yourself up failure concerning your home isn't a good financial move.
It's best to be content and live within your means than to use your home to access capital you can barely afford.
Why Credit History Is Essential
ReplyDeleteYour credit score says a great deal about what kind of borrower you are and it is the industry standard used by lenders to accept or reject applications. It tells the lender how equipped you are to pay off debts. A credit score of 620 is considered average while a score of 900 is ideal. If your credit rating drops below 620, you will have to think of other ways to get financed and deal with higher interest rates on Hawaii mortgage loans.