The significance of home equity loans

I've talked before about the importance of owning property. Whether you live in the place you own, or you're renting it out, it's nice to have your monthly rent payment going towards something rather than "down the drain."

Aside from that psychological boost, there is a financial advantage to owning your own home. Obviously, you're increasing your net worth, but you are also eligible for a home equity loan.


Essentially, you're borrowing money against the value of your house. A home equity loan is generally used to pay off big purchases, like medical expenses, a college education, or a super nice car (?).

The interest rate is generally fair, at a little over prime. You must have a good credit rating, and the cash is delivered in a lump sum payment (very nice).

Alternatively, you can get a Home Equity Line of Credit (HELOC). This is similar to the home equity loan, in that  you are also borrowing money against your house. However, rather than receiving a lump sum payment, the borrower is given a line of credit within which to work: it's pretty much like having a large credit card.

Abusing the Home Equity Line of Credit is often faulted as one of the reasons for the subprime mortgage crisis: essentially, people were exploiting this generous line of credit in order to buy less-than-important items, such as boats, cars, and prostitutes.

After the mortgage crisis in the United States, many American banks froze HELOC lending, as so many homes had been suddenly reduced in value. Banks like Chase are now facing lawsuits over this freeze.

To sum up, owning a home can be a lifesaver when you have to pay off medical bills or college tuition. It's nice to have the security of a large amount of collateral under your feet whenever the situation arises.

76 comments:

Every Day said...
March 25, 2011 at 10:56 AM

I wish I can afford a house. :|

Mike said...
March 25, 2011 at 11:36 AM

Really interesting post , now just need to find the initial capital for that house ;)

Colin B said...
March 25, 2011 at 2:07 PM

I have a feeling if I ever owned my own house it would end up being burned down in a drunken rampage of confusion

husar said...
March 25, 2011 at 2:09 PM

nice post, good job

+ follower:)

Eric P said...
March 25, 2011 at 3:36 PM

Don't think I'll be able to afford a house, and by extention get a home equity line of credit, for quite a while. I won't hold my breath.

Jay.CA said...
March 25, 2011 at 4:57 PM

never thought of a home as an asset against other loans. :D

mac-and-me said...
March 25, 2011 at 5:24 PM

interesting post

ed said...
March 25, 2011 at 6:57 PM

owning a home sounds way better than renting an apartment

Aaron M. Gipson said...
March 25, 2011 at 7:14 PM

I bought a house down here pretty easily, but the credit standards are alot more lax (non existent). I don't think I could ever qualify for a loan in the States right now the way the economy is.

Grafted said...
March 25, 2011 at 9:34 PM

Interesting

TheHarvester said...
March 26, 2011 at 6:12 AM

as usual shelby, amazing stuff. love to have some insight on equity and the loans now

HiFi said...
March 26, 2011 at 6:27 AM

Good write up. Very insightful.

duffboi said...
March 26, 2011 at 7:31 AM

I'll keep this in mind, for if I ever own a house again.

Rachel Neilson said...
March 26, 2011 at 9:12 AM

After I read this I went to go buy a house, and since my buddy works at the Target I got it for hella cheap.

Zombie said...
March 26, 2011 at 12:44 PM

Cant wait to get my own place! :D

schultzz said...
March 26, 2011 at 1:23 PM

this is why i hate loans.

Glovey said...
March 26, 2011 at 1:30 PM

Great post! Was a really good read! thanks for sharing!

Zeek said...
March 26, 2011 at 5:12 PM

I am in the midst of trying to figure out what to do - buy a home or just rent until I get my degree and move? Knowing information like this will definitely help!

Alexis said...
March 27, 2011 at 4:34 AM

Sounds like an excellent strategy. All the more incentive for moving out of my parents' place!

Killtrip said...
March 27, 2011 at 10:16 AM

Just bought a house 3 years ago.. that gives me plenty of time to read up on this stuff before I buy my next house :D

G said...
March 27, 2011 at 2:45 PM

Best thing I ever did was buy a house straight out of uni...it was just before the market went skyward and has enabled me to continually move up the chain over the years.

ebm93 said...
March 27, 2011 at 7:23 PM

I have to start saving money t.t lol

Spike said...
March 28, 2011 at 2:32 AM

very informative. thanks

Patti D. said...
March 28, 2011 at 8:05 AM

great info, too bad sometimes you don't own the house, but the bank does.

Max Downton said...
March 30, 2011 at 4:12 AM

That's the aim - owning property... In London, Paris, New York. We can dream right?

Rorschach Redemption said...
March 31, 2011 at 6:49 AM

Damn right Chase is facing lawsuits. That's all I have to say at this time.

I can't emphasize your mentioning of having a good credit rating for this, so readers make sure you keep your score up!

Andrew hall said...
July 30, 2012 at 3:40 AM

I Love your articles guys keep it up.
unsecured loans online

Andrew hall said...
August 18, 2012 at 4:27 AM

A great website with interesting and unique material what else would you need.
dwi defense lawyer

Ian bell said...
September 10, 2012 at 5:55 AM

I beyond doubt appreciate your articles and blogs
dui legal help

Anonymous said...
February 18, 2013 at 7:32 AM

It's a pity you don't have a donate button!

I'd definitely donate to this fantastic blog! I suppose for now i'll settle for book-marking and adding your RSS
feed to my Google account. I look forward to brand new updates and will talk about this site
with my Facebook group. Chat soon!

my web-site ... bad credit installment loan
My webpage :: good work from home jobs

Anonymous said...
February 21, 2013 at 2:21 PM

Very good blog you have here but I was wondering if you knew of any message boards that cover the same topics talked about here?

I'd really like to be a part of community where I can get feed-back from other experienced people that share the same interest. If you have any recommendations, please let me know. Many thanks!

Also visit my website :: utilisateur:denicecon - Elixir

Anonymous said...
February 22, 2013 at 10:41 AM

It's going to be ending of mine day, except before ending I am reading this great piece of writing to improve my knowledge.

My web site; click the next document

Anonymous said...
February 26, 2013 at 4:31 PM

Do you mind if I quote a few of your posts as long as I provide credit and sources back to your webpage?
My blog site is in the exact same area of interest as yours and
my visitors would certainly benefit from some of
the information you present here. Please let me know if this alright with you.
Thanks!

my web-site http://www.aritclemobilize.com/article.php/21-01-2013target-your-credit-worries-with-some-fantastic-suggestions.htm

Anonymous said...
March 1, 2013 at 7:31 AM

Do you have a spam problem on this blog; I also am a blogger,
and I was wondering your situation; we have developed some
nice procedures and we are looking to swap solutions
with other folks, be sure to shoot me an email if interested.



Visit my web site; Usuario:FosterC7 - JarfilGatos

Anonymous said...
March 1, 2013 at 4:37 PM

Hi there colleagues, how is the whole thing,
and what you want to say about this paragraph, in my view its genuinely remarkable
for me.

Also visit my blog post :: credit card affiliate
my web page > simply click the up Coming website

Anonymous said...
March 6, 2013 at 8:40 AM

There's certainly a great deal to know about this subject. I love all the points you've made.


Here is my website - just click the up coming site

Anonymous said...
March 9, 2013 at 1:35 PM

Hey! This post could not be written any better!
Reading through this post reminds me of my good old room mate!
He always kept chatting about this. I will forward
this article to him. Fairly certain he will have a good read.

Thanks for sharing!

my weblog ... How To Get Refinanced With Bad Credit

Anonymous said...
March 11, 2013 at 1:11 PM

Hi there! I just wanted to ask if you ever have any issues with hackers?
My last blog (wordpress) was hacked and I ended up losing a few months of
hard work due to no backup. Do you have any solutions to protect against
hackers?

my homepage :: mouse click the following internet site

Anonymous said...
March 31, 2013 at 7:15 AM

great points altogether, you simply won a new reader.
What may you suggest about your submit that you made some days in
the past? Any sure?

Look into my web page - trinidad

Anonymous said...
April 2, 2013 at 4:09 AM

I visited several sites however the audio feature for audio songs current
at this site is really wonderful.

my site letting go quotes

Anonymous said...
April 2, 2013 at 4:24 AM

I believe that is among the such a lot significant info for me.
And i am happy studying your article. But wanna statement
on few general things, The web site taste is wonderful,
the articles is in reality nice : D. Good activity, cheers

Look into my webpage: madea quotes

Anonymous said...
April 2, 2013 at 10:04 AM

Hi! I just wanted to ask if you ever have any trouble with hackers?
My last blog (wordpress) was hacked and I ended up losing
several weeks of hard work due to no back up. Do you have any methods
to protect against hackers?

My page ... genghis khan quotes

Anonymous said...
April 6, 2013 at 10:49 PM

I’m not that much of a online reader to be honest but your
blogs really nice, keep it up! I'll go ahead and bookmark your site to come back down the road. All the best

Here is my page: mouse click the up coming document

Anonymous said...
April 7, 2013 at 10:33 PM

Hi, Neat post. There's an issue along with your website in internet explorer, could check this? IE still is the marketplace chief and a good part of folks will pass over your fantastic writing because of this problem.

My blog: miroverve breast serum

Anonymous said...
April 8, 2013 at 5:00 AM

This is my first time visit at here and i am genuinely impressed to read all at single place.


My web site ... federal direct consolidation loans

Anonymous said...
April 8, 2013 at 5:00 AM

Right away I am going away to do my breakfast, once having my breakfast coming yet again to read further
news.

Also visit my homepage :: top 10 reseller web hosting

Anonymous said...
April 9, 2013 at 10:07 AM

Yesterday, while I was at work, my sister stole my iPad and tested to see if it can survive a 30
foot drop, just so she can be a youtube sensation.
My apple ipad is now broken and she has 83 views. I know this is entirely
off topic but I had to share it with someone!

my website - simply click the next web page

Anonymous said...
April 9, 2013 at 9:56 PM

I do not even know how I finished up right here, but I assumed this submit was great.

I don't recognise who you might be but certainly you are going to a well-known blogger when you are not already. Cheers!

My site; buygenf20.eklablog.com

Anonymous said...
April 13, 2013 at 1:07 AM

Saved as a favorite, I really like your site!



Feel free to surf to my blog post - semenax

Anonymous said...
April 13, 2013 at 7:12 AM

Just desire to say your article is as amazing.
The clarity on your put up is just excellent and i can assume you are knowledgeable on this
subject. Fine along with your permission let me to clutch your feed to keep updated with impending post.
Thank you 1,000,000 and please carry on the gratifying
work.

Feel free to visit my web blog - buymaleextra.eklablog.com

Anonymous said...
April 13, 2013 at 7:07 PM

It's going to be ending of mine day, but before finish I am reading this wonderful article to improve my know-how.

Feel free to visit my homepage :: http://volumepills.crowdvine.com/posts/38749352

Anonymous said...
April 13, 2013 at 10:47 PM

Good info. Lucky me I found your blog by accident (stumbleupon).
I have saved as a favorite for later!

Here is my web page: http://buyproenhance.eklablog.com/proenhance-review-buy-cheap-proenhance-online-a64949261

Anonymous said...
April 16, 2013 at 5:37 AM

Superb blog! Do you have any hints for aspiring writers?

I'm hoping to start my own site soon but I'm a little lost on everything.
Would you propose starting with a free platform like Wordpress or go for a paid option?
There are so many choices out there that I'm completely confused .. Any ideas? Many thanks!

My webpage: sizegenetics

Anonymous said...
April 16, 2013 at 8:21 AM

First of all I would like to say excellent blog!
I had a quick question in which I'd like to ask if you don't mind.
I was interested to know how you center yourself and
clear your thoughts prior to writing. I have had a difficult time
clearing my mind in getting my thoughts out. I do enjoy writing but it just seems like the first
10 to 15 minutes are generally lost just trying to figure out how to begin.
Any ideas or hints? Thanks!

my site; does maxoderm work

Anonymous said...
May 5, 2013 at 11:29 PM

Hi are using Wordpress for your site platform? I'm new to the blog world but I'm trying to get started and set up my own.
Do you require any html coding knowledge to make your own blog?
Any help would be greatly appreciated!

my blog ... hemroid treatment over the counter

Anonymous said...
May 6, 2013 at 3:37 PM

Can I simply just say what a relief to find someone that genuinely
understands what they are discussing on the net. You certainly realize how to bring an issue to light and make it important.
More people should check this out and understand
this side of your story. I was surprised you're not more popular given that you definitely possess the gift.

Review my web page - volume pills reviews

Anonymous said...
May 6, 2013 at 3:43 PM

Thanks for sharing your thoughts on office 2003. Regards

My site - male enhancement over the counter

Anonymous said...
May 6, 2013 at 3:52 PM

We're a gaggle of volunteers and opening a brand new scheme in our community. Your site offered us with helpful information to work on. You have performed an impressive job and our whole neighborhood can be thankful to you.

my weblog ... boils treatment

Anonymous said...
May 6, 2013 at 9:54 PM

Hi there I am so thrilled I found your webpage, I really found you by accident, while I was browsing on Google for
something else, Nonetheless I am here now and would just like to say cheers for
a fantastic post and a all round interesting blog (I also love the
theme/design), I don't have time to read it all at the minute but I have saved it and also included your RSS feeds, so when I have time I will be back to read a lot more, Please do keep up the great job.

My webpage - semenax

Anonymous said...
May 7, 2013 at 4:50 PM

I located your blog on yahoo and find out a handful of of your posts.
excellent perform! I just added you to my Google News Reader.


Here is my web page: Ray

Anonymous said...
May 7, 2013 at 4:50 PM

Most of the blogs is not the spot, I just want to say that this place is
genuinely weird in there! Frankly a excellent post.

Also visit my homepage - refinance my home with bad credit

Anonymous said...
May 8, 2013 at 6:01 AM

My brother suggested I might like this web site.
He was entirely right. This post actually made my day.
You cann't imagine simply how much time I had spent for this information! Thanks!

my blog post: http://www.guitartube.com.au

Anonymous said...
May 9, 2013 at 1:40 AM

What's up i am kavin, its my first time to commenting anywhere, when i read this piece of writing i thought i could also create comment due to this sensible post.

Here is my webpage :: alawodepeter.blogspot.com

Anonymous said...
May 12, 2013 at 11:18 PM

Tremendous issues here. I'm very happy to look your post. Thank you so much and I am having a look forward to contact you. Will you please drop me a mail?

Feel free to visit my web blog does supplements really work

Anonymous said...
May 13, 2013 at 6:16 AM

Today, while I was at work, my cousin stole my apple ipad and tested to see if it
can survive a 40 foot drop, just so she can be a youtube sensation.
My iPad is now broken and she has 83 views.
I know this is totally off topic but I had to share it with someone!


Also visit my webpage ... nitric oxide body

Anonymous said...
May 21, 2013 at 4:20 PM

Howdy just wanted to give you a quick heads up. The text in your article seem to be running off the screen in Chrome.
I'm not sure if this is a format issue or something to do with browser compatibility but I thought I'd post to
let you know. The design look great though! Hope you get the
issue resolved soon. Many thanks

Feel free to visit my web site ... buy provacylprovacyl review

Anonymous said...
May 22, 2013 at 10:44 PM

I ωas suggestеd this blog by mу cousin.
I'm not sure whether this post is written by him as no one else know such detailed about my trouble. You'гe аmazing!
Thanks!

Hеre іs my blog ... diamondlinks review

Anonymous said...
May 23, 2013 at 1:45 AM

Hiya! I know this is kinda off topic but I'd figured I'd ask.
Would you be interested in exchanging links or maybe guest authoring a blog post or vice-versa?
My website discusses a lot of the same topics as yours and I think we could greatly benefit from each other.
If you're interested feel free to send me an email. I look forward to hearing from you! Great blog by the way!

My blog post: buy smoke deter

Anonymous said...
May 23, 2013 at 10:44 AM

I pay a quick visit daily a few web pages and sites to read articles, however this weblog
presents feature based posts.

Here is my website breast actives

Anonymous said...
May 24, 2013 at 4:06 AM
This comment has been removed by a blog administrator.
Anonymous said...
May 24, 2013 at 11:03 PM
This comment has been removed by a blog administrator.
Anonymous said...
May 25, 2013 at 1:41 AM
This comment has been removed by a blog administrator.
Anonymous said...
June 6, 2013 at 7:33 AM
This comment has been removed by a blog administrator.
Anonymous said...
June 8, 2013 at 11:52 AM
This comment has been removed by a blog administrator.
Anonymous said...
June 10, 2013 at 12:00 AM
This comment has been removed by a blog administrator.
Anonymous said...
June 14, 2013 at 8:40 PM
This comment has been removed by a blog administrator.

Post a Comment