How Home Equity Borrowing Affects Your Credit Score

MoneyTips

Your home equity is the amount of your home that you own – in other words, the market value of your home minus the amount of principal that you owe on your loan. For many Americans, it’s one of their largest financial assets.

If you need money for various projects and expenses, your home equity can be a useful source of collateral. You can draw on this asset with a home equity loan or a home equity line of credit (HELOC).

While home equity loans are usually lump sum loans with fixed payments and interest rates, a HELOC acts more like a credit card limit. You can draw against your HELOC up to that limit and replenish the supply of available credit by paying off part of the HELOC and the associated interest.

Home equity loans can be attractive for moderately large expenses. Currently, home equity loan interest rates are near 6% and HELOC rates are approximately 6….

Nearly 3 Of 4 Won’t Date People In Significant Debt

MoneyTips

Are you having trouble getting a date? Could be your rap, your looks, or your excessive debt.

According to a recent survey by Finder.com, 72% of respondents say they would re-think a relationship with a partner in significant debt. (That’s similar to the percentage in last year’s Finder.com survey, so don’t expect debt to become a desirable trend.)

“With 72% of Americans saying they’d reconsider a romantic relationship if the other person was in debt, singles with unsettled loans might want to sort out their balance sheets before hitting the dating scene,” says finder’s Consumer Advocate Jennifer McDermott.

According to the survey, “While debt is undoubtedly a turn off, not all debts are viewed as equally unappealing. For example, credit card debt is the number one …

Homeowner’s Tappable Equity Lower For First Time Since Housing Crisis

MoneyTips

The Pool Is Shrinking

A home equity loan or line of credit (HELOC) can be a useful financial management tool – but only if you have the available equity to take advantage of it. Do you know how much you could borrow against your home if you had to?

Black Knight’s October 2018 Mortgage Monitor reports America’s total mortgage equity is at $9.8 trillion, with $5.9 trillion of that “tappable” – available for homeowners to use as borrowing collateral.

While $5.9 trillion is a large pool, it’s $140 billion less than it was in the previous quarter – the first quarterly decline since the housing crisis. Tappable equity fell in 60% of the 100 largest housing markets and twelve of the top fifteen. The average homeowner with tappable equity had $136,000 available for borrowing, a decrease of $2,300 from last quarter.

Is your tappable equity falling along with the average, or rising, as it should with your payments? The answer lies in your local ho…

Be on the Lookout for Home Improvement Scams

MoneyTips

Ah, summertime. The weather warms up, the flowers bloom, and the flocks of home improvement scammers return for their annual summertime gathering.

Like other unwanted pests, shady home improvement contractors tend to show up in the spring and summertime offering services ranging from driveway sealing to chimney repair to roof replacement to a complete home makeover. These scam artists often prey on the elderly, who can be more easily tricked or bullied into signing bad contracts. Avoid this situation by taking some precautionary steps.

  • Initiate the Search – Some contractors will approach you unsolicited and ask if you want particular work done because they just happen to be in the area, have excess supplies to deal with, or would like to use your home as a model for their services. Even if they seem sincere, ask for contact information and let them know you will be in touch if you need work done. Never sign contracts on the spot.

Why Your Neighbors Are Tapping Their Home Equity

MoneyTips

You’ve accumulated a decent amount of equity in your home. Why not put your equity to use with a home equity loan or a home equity line of credit (HELOC)?

Both allow you to borrow against the equity in your home. A home equity loan is a lump sum option with a fixed interest rate and payment schedule, while a HELOC allows you to draw funds as needed (similar to a credit card).

If you did tap your home equity, what would you do with the funds? Probably make home improvements or repairs, according to a recent Bankrate.com survey. Almost three-quarters of homeowners considered those good reasons to borrow from your home equity. Other popular reasons included debt consolidation (44%), covering educational costs (31%), paying regular household bills (15%), and making investments (12%).

It’s a sign of trouble when you’re using a loan to pay regular expenses. According …

9 Alternatives To A Reverse Mortgage

MoneyTips

A reverse mortgage allows you to convert the equity in your home to cash that you can use for other purposes. Essentially, you’re selling your home back to a lender in increments.

It’s a popular method for seniors to supplement living expenses. Repayments don’t begin until the owner permanently moves out of the home, passes away, or transfers ownership – as long as the home is maintained and property-related bills (taxes and insurance) are paid.

However, reverse mortgages have downsides, including equity-reducing fees and potential financial burdens to heirs – not to mention running out of equity before you run out of expenses. Consider these alternatives to a reverse mortgage before you commit.

1. Selling/Downsizing – Instead of selling in increments, why not sell all at once? You’ll probably receive more of your equity and can use some of those funds toward

Video: Seniors, Don’t Worry About Timeshares You Can’t Afford

MoneyTips

By Eric Olsen, Executive Director, HELPS
Nonprofit Law Firm

I just got off the phone with a senior couple who have a timeshare they can’t afford and don’t use any longer. They had called a company who advertised that they help people get out of timeshares. (I hear such advertisements on the radio and television regularly.) The senior couple had paid this company nearly $3,000. The next payment of $1,000 was scheduled to come out of their account in a few days. I took a deep breath and explained that they didn’t actually need to keep paying for their timeshare, let alone pay someone to help get out of it. The timeshare company couldn’t take anything from them if they simply stopped paying. The law protects their retirement income from collection – including wage garnishments and bank levies from the timeshare company. That includes Social Security, pensions, VA benefits …

Can This New Reverse Mortgage Alternative Help You?

MoneyTips

Reverse mortgages can be a useful tool for seniors attempting to convert the equity in their home into cash for living expenses or other retirement purposes. The loan is usually paid out over time instead of as a lump sum.

There are no repayments as long as the senior taking out the loan continues to live in the home, properly maintains it, and pays all the necessary property taxes and other property-related fees. Once the primary borrower passes away, moves away, or sells the property, the loan must be repaid.

The reverse mortgage loan, along with accrued interest, is repaid with the proceeds of the sale of the home. If any equity remains in the home, the proceeds go to the seller.

In essence, with a reverse mortgage, you are selling the equity in your home back to a lender in increments.

The majority of reverse mortgages are Federal Housing Administratio…

Construction Liens 101

MoneyTips

A construction lien, otherwise known as a mechanic’s lien, is a claim that is made against a property by a contractor, subcontractor, or other professional party involved in a construction project. These liens exist to protect construction professionals from non-payment for materials or services rendered.

If you are withholding payment to a contractor for a construction project of any sort for substandard work or another dispute, the contractor has a right to file a construction lien on your property. Unfortunately, the same principle allows a subcontractor to file a construction lien on your property if the contractor did not pay the subcontractor. You, as the property owner, are still potentially on the hook.

Do not ignore a construction lien filed against your property. In the best case, the lien makes it virtually impossible to sell or refinance your property. If it is …