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10 Ways to Purchase the Wrong Bathroom Vanity
The bathroom vanity is the sink-cabinet-mirror combination. It's the showpiece of your bathroom. Here are ten things to avoid when choosing a vanity...you might be surprised.
You are redoing your bathroom and there are a zillion details. After...
A Guide To Vinyl Shutters
Vinyl shutters are durable and improve the look of your home. In many cases, they can actually add to the value of the home. They are easy to install and make a great do it yourself project. If you prefer not to do the job, you can hire...
Christmas Decorating Ideas
The time has come to start putting up Christmas decorations.
But, before you rush off to your local store to buy this year's
collection of baubles, wreaths and garlands, think carefully
about your decorating theme. Christmas themes can vary...
How to Select Exterior Shutters
Installing exterior shutters is a relatively quick way to add style and color to the outside of a house. Historical and modern houses alike benefit from the timeless style of shutters. As with any home improvements, the quality and longevity of an...
Tips for Keeping Costs Down When Landscaping
Tips for Keeping Costs Down When Landscaping
Landscaping can be an expensive proposition. However, it is possible to keep the costs to yourself relatively low by paying attention to a few practices that can save you money. After all, the most...
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Home Equity – Don’t Spend It On Risky Investments
The housing market has exploded in the last five years, and homeowners are finding that the equity in their homes is greater than it has ever been. The equity in a home is the difference between the market value of the home and the amount still owed on it. As home prices increase, so does the equity for those who own their homes. In parts of California, home values have tripled during the last five years, and homeowners are doing increasingly risky things with their newfound “wealth.” Anyone considering borrowing against their home’s equity should carefully consider the possible pitfalls of doing so.
Traditionally, most home equity lending was done for purposes of home additions or remodels. These have been considered low-risk loans, as the house is collateral for a loan that improves the house itself. As a bonus, the improvement usually increases the value of the home, making the loan even safer for the lending company. Occasionally, homeowners default on such loans, but the foreclosed property can easily be sold to recoup the loss. Times have changed, and many, if not most, home equity borrowers are now using the money for different, and riskier purposes.
Thousands of people who have suddenly found themselves with hundreds of thousands of dollars of equity in their homes are treating that value as a windfall of cash. Instead of traditional uses, such as home improvements, borrowers are using their equity to buy more real estate to use as rental property. There are cases of individuals with homes valued at several hundred thousand dollars who have borrowed against their equity, bought more property, borrowed against that equity, and repeated this process six, seven, ten or more times, attempting to build up an empire of rental property. It’s hard enough for most people to manage one mortgage, but some people who are caught up in the “equity frenzy” are now managing
ten or more of them! On the surface, it may appear that these intrepid individuals are simply taking advantage of an opportunity, turning several hundred thousand dollars worth of equity into millions of dollars worth of rental property. On the other hand, these “investors” may be inviting disaster.
As more and more people buy real estate on speculation, the equilibrium of the real estate market is affected. The additional competition among buyers, fueled by the real estate speculators, is causing prices to go up even more. Eventually, the market is going to peak. Buyers who need a home to actually live there can only pay so much for them before the homes simply become unaffordable. And not every speculator can own ten rental properties, as the market can only support so many rental properties before the market becomes saturated. Once that happens, prices will fall. And when they do, all of these buyers who purchased their homes using their own home’s equity will find themselves under a mountain of debt.
It’s nice to have some equity in your home. It’s also nice to be able to borrow against that equity for home improvements or debt consolidation. Using your equity as though it was cash you can freely spend is dangerous, as many speculators will soon learn.
About the Author: ©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.End-Your-Debt.com, a Website devoted to debt consolidation information and http://www.HomeEquityHelp.net, a site devoted to information on home equity loans.
Source: www.isnare.com
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