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home equity line of credit increase

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kate032
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quote:
Originally posted by littleroc02us

I still don't agree with that because what you do is if it's an emergency like the water heater blows up or you need to replace a door due to a break in, then you use your emergency fund that is for emergencies, if it isn't an emergency then you save up the money and pay in cash.


And if the furnace breaks in the middle of winter in the midwest or north?

What you mentioned above is certainly what I'd do. However, if someone does not have an emergency fund, and not fixing a problem could potentially make many greater problems, borrowing money may be the lesser of two evils.

I've learned not to say "never" simply because every once in awhile a situation arises that might be an exception. I'd rather make a house safer with a loan (and pay it off ASAP) than live with some unsafe situation, which begs the question of how essential fixing the problem is. If there was a slow carbon monoxide leak in a house, it could be deadly not to fix it.
Post Fri Jul 29, 2011 3:28 pm
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littleroc02us
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And if the furnace breaks in the middle of winter in the midwest or north?

What you mentioned above is certainly what I'd do. However, if someone does not have an emergency fund, and not fixing a problem could potentially make many greater problems, borrowing money may be the lesser of two evils.

I've learned not to say "never" simply because every once in awhile a situation arises that might be an exception. I'd rather make a house safer with a loan (and pay it off ASAP) than live with some unsafe situation, which begs the question of how essential fixing the problem is. If there was a slow carbon monoxide leak in a house, it could be deadly not to fix it.[/quote]

My philosiphy that I use that I wish others would follow is that people need to learn to set aside an emergency fund that they never touch for anything except emergencies and the main point I want to make is that we all have to stop leaning on borrowing money every time there is a problem. Using credit is not a good idea for anything IMO except for a mortgage and eventually I too hope to buy a house with cash someday.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Fri Jul 29, 2011 3:35 pm
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littleroc02us
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quote:
Originally posted by kate032
quote:
Originally posted by littleroc02us

I still don't agree with that because what you do is if it's an emergency like the water heater blows up or you need to replace a door due to a break in, then you use your emergency fund that is for emergencies, if it isn't an emergency then you save up the money and pay in cash.


And if the furnace breaks in the middle of winter in the midwest or north?

What you mentioned above is certainly what I'd do. However, if someone does not have an emergency fund, and not fixing a problem could potentially make many greater problems, borrowing money may be the lesser of two evils.

I've learned not to say "never" simply because every once in awhile a situation arises that might be an exception. I'd rather make a house safer with a loan (and pay it off ASAP) than live with some unsafe situation, which begs the question of how essential fixing the problem is. If there was a slow carbon monoxide leak in a house, it could be deadly not to fix it.


Those situations are emergencies and I would use my emergency fund to fix them. If someone doesn't have one, they need to stop paying their debt except the minimums and get one quick.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Fri Jul 29, 2011 3:38 pm
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keshavmish
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Homeowners have several options for acquiring extra cash. If your home has a substantial amount of equity, you may refinance for a lower interest rate and obtain a lump sum of money. In addition, getting a home equity loan or line of credit puts extra cash in your pocket. Home equity lines of credit are very popular. With these lines of credit, you may withdraw money from an open account whenever you need emergency cash.

How Do Home Equity Line of Credits Work?

Home equity lines of credit are similar to credit card cash advances. If you open a line of credit, using your home's equity as collateral, you are provided a debit or ATM card. In most cases, the lender will also provide you with a checkbook. If you need money for home improvement, car repairs, or vacation, you may withdraw money from your line of credit.

The money you withdraw has to be repaid. Each month the lender will send you a statement with your minimum payment due. Because the amount you withdraw from your home equity line of credit will fluctuate, so do your minimum payments. While home equity lines are similar to credit cards, the interest rate is much lower. Thus, your payments are smaller and you are able to payoff the balance quicker.

Home Equity Line of Credit Rates

If you get a home equity line of credit, the lender will either give you a fixed or variable rate. There are advantages to both types of rates. Variable rates are great for individuals who want a low introductory rate. If you do not plan on using a large portion of your line of credit, a variable rate is a good option. However, be aware that your rate may increase, or decrease throughout the years. Interest rate increases result in higher monthly payments.

If you plan on using your home equity line of credit to payoff debts or other huge expenses, a variable rate is not in your best interest. It will likely take years before the line of credit is paid back to the lender. During this time, an interest rate increase may drastically increase your monthly payments. If you are unable to maintain payments, the lender may foreclose on your home. Thus, a fixed rate interest rate is a better option. This way, your monthly payments are predictable.
Post Wed Aug 17, 2011 1:14 pm
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