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Yeah, the "rewards" are that if you don't/can't control your spending or if you happen to lose your job and can't make the payments on the credit card, then you'll LOSE YOUR HOUSE instead of just getting a bad mark on your credit rating. No thanks!
I bought a home that was in foreclosure in 2002. Owner got a line of credit linked to a credit card. Spent 12K and never sent in a dollar, Citibank started the foreclosure proceedings. I bought it "as is" and 60 days later sold it for 60K more than I paid and I never spent a dollar improving the property.
Classic case of ignorant people getting a loan and they failed to understand the repercussions of non payment.
I just received one in the mail. I am prequalified.
Aven Visa claims to be the world's first credit card backed by home equity.
I wonder if it has rewards?
There is absolutely NOTHING on the planet that I would want to buy with a credit card that would put my home in jeopardy if I failed to make the payment.
What a joke. Exactly what got us into this mess back in 2008. Nothing was learned. News flash. A home is a place to live not a friggin ATM machine!!
Such a card backed by home equity as the definition of a HELLOC like never before!! People still using their homes like piggy banks without actually selling it first. What a joke and I hope it blows up.
Like P.T. Barnum said:
"There's a sucker born every minute"
Just the very idea of HELOCs is completely and utterly RETARDED!
Just the very idea of HELOCs is completely and utterly RETARDED!
I don't get the animosity toward HELOCs.
HELOC stands for Home Equity Line of Credit. To me, it's similar to a traditional Home Equity Loan or "second mortgage" that one might use for home improvements. But with a HELOC you can take money out as you need it rather than in one lump sum with a home equity loan. I can tell you that when my wife wanted a new kitchen we used a HELOC, and then we rolled our son's 9.9% private student loan into it (he is paying us). The guys we used for the kitchen aren't linked to Synchrony or any of the other traditional "12 months, no interest" finance companies so we were on our own for financing.
Is the bitterness simply based on the fact that some unsophisticated people might go underwater?
HELOC stands for Home Equity Line of Credit. To me, it's similar to a traditional Home Equity Loan or "second mortgage" that one might use for home improvements. But with a HELOC you can take money out as you need it rather than in one lump sum with a home equity loan. I can tell you that when my wife wanted a new kitchen we used a HELOC, and then we rolled our son's 9.9% private student loan into it (he is paying us). The guys we used for the kitchen aren't linked to Synchrony or any of the other traditional "12 months, no interest" finance companies so we were on our own for financing.
Is the bitterness simply based on the fact that some unsophisticated people might go underwater?
To me, the idea of HELOC just does not make sense to me.
Aka, it is simply lending money to people coming out of the "theoretical" value of your home. A value that is only realized if you can actually SELL it for that much.
HELOCs and even rising home values in general only give people the feeling of wealth without the actual liquidity. Similar scenario with stock market as well.
To me, the idea of HELOC just does not make sense to me.
Aka, it is simply lending money to people coming out of the "theoretical" value of your home. A value that is only realized if you can actually SELL it for that much.
HELOCs and even rising home values in general only give people the feeling of wealth without the actual liquidity. Similar scenario with stock market as well.
My wife's new kitchen was realized by a HELOC and we didn't sell the house. My son's 9.9% private student loan was converted to a 3.25% loan, which is a realized savings, again without selling the house. Nothing to do with a "feeling of wealth".
If there's something about HELOCs that you just don't like but can't explain, that's OK.
I took a HELOC last year. I had no real plans for it and haven't used it yet but the rates were so low I figured I'd use it for an emergency house fund since my HVAC system is getting pretty old and I've need to do some maintence and updating at some point. It costs me nothing to keep it open and there's no minimum initial draw so it's an all around good deal for me.
My wife's new kitchen was realized by a HELOC and we didn't sell the house. My son's 9.9% private student loan was converted to a 3.25% loan, which is a realized savings, again without selling the house. Nothing to do with a "feeling of wealth".
If there's something about HELOCs that you just don't like but can't explain, that's OK.
It's all fun and games till someone's eye gets put out.
Or, in more specific terms, it's a real effective way to owe a lot more than the house is worth. It works, kinda sorta, if house values go up forever, except that when you sell the house you've still got to have a place to live. So to make it work, you need to live in a high cost of housing area in a large house, have the market value of the house go constantly up, and then be able to sell out with enough equity to retire the home equity loans, any remaining mortgage, and still be able to buy a less expensive house that you want to live in.
On the other hand, loans have to be repaid. Believe me, if you lose your sources of income, your creditors will still require that check every month. If you keep minimal debt, you theoretically lose some potential income (the old "borrow money and then invest it in something that earns more than the interest rate" scheme that so many are enamored of), but you also reduce fixed costs. When times get tight, you want few fixed costs. Variable costs you can do something about.
It's all fun and games till someone's eye gets put out.
Or, in more specific terms, it's a real effective way to owe a lot more than the house is worth. It works, kinda sorta, if house values go up forever, except that when you sell the house you've still got to have a place to live. So to make it work, you need to live in a high cost of housing area in a large house, have the market value of the house go constantly up, and then be able to sell out with enough equity to retire the home equity loans, any remaining mortgage, and still be able to buy a less expensive house that you want to live in.
On the other hand, loans have to be repaid. Believe me, if you lose your sources of income, your creditors will still require that check every month. If you keep minimal debt, you theoretically lose some potential income (the old "borrow money and then invest it in something that earns more than the interest rate" scheme that so many are enamored of), but you also reduce fixed costs. When times get tight, you want few fixed costs. Variable costs you can do something about.
Still not getting the general objection to this specific type of borrowing and not getting why the value of the house needs to increase with a HELOC. I have a mortgage and if I don't pay it, theoretically I lose my house. If I don't pay the electric bill the lights get shut off, and so on.
We operate our household on the "principle of the going concern" meaning we plan on paying the mortgage and all our other bills every month or whenever they are due.
So again, we borrowed money at 3.25% interest to pay for my wife's new kitchen and to help our son who had a 9.9% private student loan. We used a HELOC.
If the objection to HELOCs is that "unsophisticated poor people may borrow irresponsibly" then I agree, but that doesn't make HELOCs intrinsically bad.
better to get a loan from Guetto on the corner at least then you only will have your legs broken not lose your house
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