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Home Equity News
Home Equity is NOT Being Viewed as a Lifetime Burden
A poll commissioned by Ditech.com and reported in the October 16, 2005 LA Times found that the majority of homeowners plan to pay off their mortgages within specific timelines. For example, over one-third (38%) have paid off more than 50% of their first, second and equity lines and another one-third have paid off their mortgage debt in full. In fact, HE debt is not being viewed as just another financial instrument as only 4% of owners say they don't
expect to payoff their mortgages and only 6% say they will extinguish their debt when they sell.
HE debt is being viewed as a means to asset ownership rather than as the means to a more materialistic lifestyle. Allen Fishbein, director of housing and credit for the Consumer Federation of America finds these results "consistent" with research his group has conducted and adds, "I think that the notion that consumers think of their homes as just a piggy bank is really oversold. People take their (mortgage) responsibilities very seriously".
New Credit Rules May Open Up More HELOC Qualifiers
Home owners with lower credit scores may benefit from new credit reports (BPSs-bill-paying scores) available beginning in early October. The BPs will provide a "full picture" of the payment history of a consumer, including rent, electric and gas charges, telephone bills, small business loans, payday loans, alimony and child support.
As National Credit Reporting Association Executive Director Terry Clemens stated in an article on theday.com, ""More than 70 million Americans make rent, mortgage and other recurring bill payments that are not reported to traditional credit bureaus;" and those consumers "often have lower credit scores than they should and pay more for housing, credit and insurance than they deserve," It is unknown yet how lenders intend to use the new score; whether or not it will be used in combination with traditional credit scoring."
Equity loans: More popular, but more confusing
Many homeowners don't understand what an equity loan is. Lenders worry that consumers believe equity loans have high closing costs and are a hassle to apply for.
More Homeowners Take Equity Lines of Credit
About 7.2 million homeowners took out home equity lines of credit last year, up 12 percent from 2001 when 6.4 million such credit lines were established, according to tabulations released today by the U.S. Census Bureau.
Use Home Equity To Consolidate Debts
Most of us can run up credit card debt without even knowing exactly how we did it
Home Equity Lending Warnings |
Consider carefully before refinancing your home or taking out a second mortgage. Although these loans allow you to take tax deductions that you could not take with other types of loans, they can reduce the equity you have built up in your house. If unfortunate circumstances arose & you aren't able to make your mortgage payments, you could lose your home.
Home equity loans can either be a revolving line of credit or a one-time, closed-end loan. Revolving lines of credit offer flexibility but the interest rate is variable, and your payments can increase significantly. With a fixed rate second mortgage or closed-end loan, you receive a lump sum.
For more information, please visit: consumeraction.gov/caw_credit_loans.shtml |
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