Is Now the Time for a Cash-Out Home Equity Loan?
One of the mortgage trends that is not changing is the amount of money mortgage lenders are spending on ads. Especially popular? Cash-out home equity loan ads. Mortgage lenders are encouraging consumers to take advantage of any equity they have in their homes. Despite falling home prices and values in many areas, equity is still present for many homeowners. Here is what the New York Times reports on the home equity loan ads running right now:
…As recently as Jan. 8, Ditech, a unit of GMAC, ran Internet ads telling people they could take cash out of their houses, totaling up to 95 percent of the value of their homes.
And Bank of America still says in online ads that people should refinance to “get the cash you need, when you need it.†Many people who are having problems with their mortgage payments are those who took cash out of their homes as their appraisals rose. When asked about the cash-out ad, Joe Goode, a spokesman for Bank of America, said homeowners still have considerable equity in their homes.
“Taking equity out of one’s home is still a smart way for consumers to finance things like home improvements,†he said.
But is it really that smart right now? Is now the time for a cash-out home equity loan?
Honestly, it might not be the best time for you to take out a cash-out home equity loan. While it may give you some extra cash now, you still have to pay it off later. And most of these types of loans have adjustable rates, so while the second mortgage interest rate may be low now, it is unlikely to remain so. If you decide to refinance to a second mortgage, try to get a fixed rate.
Even using a cash-out home equity loan to get out of debt may be a bad idea. You don’t want to secure your debt with your home. Carefully consider your options before getting a cash-out home equity loan. It may be a good time to buy a home, but decreasing your available equity may not be the best idea at this time.
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second mortgage, debt consolidation home equity, mortgage blog
March 2nd, 2008 at 11:47 pm
[…] Time for a Cash-Out Home Equity Loan? Published in February 18th, 2008 Posted by in Uncategorized Is Now the Time for a Cash-Out Home Equity Loan? Is Now the Time for a Cash-Out Home Equity Loan? By Miranda Marquit | February 18th, 2008 One of […]