Five good reasons to preserve your home equity

By on November 11, 2014
home_owners

With interest rates on an upward trend, homeowners are being encouraged by all and sundry payday loans direct lender only to use the equity they have in their homes to pay off or reduce higher-interest rate castle payday debt such as car finance, credit card balances, and personal loans. Barry Davies online payday loan considers the benefits of preserving home equity. This would be fine if the economy no credit check payday loans was robust and home prices were rising fast. As it is, however, the economy is fragile and the rate of home price growth has been slowing down for several months, so a much more conservative approach is indicated. Tempting as it may be to consolidat” all your debt into your home loan, we need to remember what happened to homeowners who did this when interest rates began rising just before the global economic crisis in 2008. As property values slumped following that crisis, many of these owners ended up owing more on their homes than those properties were worth – and had to pay in if they wanted or needed to sell them. Now we’re not expecting that scenario to repeat itself, but there’s also another very good reason for not using your home equity in this way. This is that you will be turning short-term debt into long-term debt – and will need tremendous discipline to increase your monthly home loan repayments enough

to avoid paying for that car or other purchases over 10 or 20 years instead of three or usa payday loans five years as originally intended. Indeed, we have often seen that what happens when homeowners do this, they actually go right out and incur more short-term debt instead of using any extra cash they have to pay down their home loan as soon as possible. Then there’s the third reason to keep your home equity intact – and in fact increase it whenever possible – and that direct lender payday loans is that you might need it for a genuine emergency. Most people are not able to save much these days, and castle payday it can be very useful to have equity in hand if you face a sudden medical or other family crisis. Fourth, it is also most useful to have equity in your existing home if you are thinking of selling and moving to another property. It will be much easier to get a loan for the new home if you have a deposit, and your equity can provide this. And of course the bigger the deposit, the lower your repayments will be on the new loan, which is really worth thinking about in the light of payday loans no credit check rising interest rates. And that brings us to next payday advance the final reason for preserving your online payday loan home equity now, which is that you need to be prepared for the possibility that interest rates could start to payday loans mobile al rise more rapidly than expected. Equity (thus a smaller home loan balance) is what cushions you against the impact of such increases, and lowers the risk of you losing your home because you can’t make the monthly bond repayment.

You must be logged in to post a comment Login

Leave a Reply