Banks are pushing the HELOCS again because the economy is going down and this is a real easy way for them to get you to use your house as an ATM until you lose it.
Do not do this.
If you must do this you MUST make sure thereโs no balloon payment at the end and you MUST understand that usually the payment amount they show you on the loan is just interest only. It looks great because theyโre showing you the estimated interest you would pay if you maxed out the HELOC. That doesnโt cover the principal and then at the end of the term you owe a balloon payment.
My friend got into one of these back in 2007 and she had no idea she was only paying interest until she got about halfway through the term and realized she was going to have to figure out a way to refinance it at the end of the term because she wouldnโt be able to drop a lump sum to pay it off.
The problem is she was 10 years older and not working full-time anymore by the time 2017 rolled around, also she had cosigned for a car for one of her kids five years before that and he wasnโt paying on time so her credit had taken some hits. The bank wouldnโt let her refinance. She didnโt qualify to refinance.
The only way this worked out for her was because she had a son who could get a VA loan for a new home, so she sold the home she was in and used the proceeds to put down on a new home and he used his VA loan to finance the rest. But she was so sad this was the home she had grown up in, it was like losing everything to her even though she didnโt end up homeless. She never wanted to sell this house but she had to because of that #HELOC.
#CapitalismKills #HousingMarket #HousingBubble #mortgages #ARM #TeaserRate
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