HOME EQUITY - No Longer an Instant ATM Machine!
TIGHTER LOAN REQUIRMENTS = NO "READY CASH" ANY TIME YOU NEED IT!
Back in the day - I mean, way back - early 2006 - it was fairly easy to receive a Home Equity Line of Credit (HELOC) from every lender in town - and out of town, for that matter. Low interest rates, tied to the prime rate. Use the money for everything - your kid's school tuition, a new car, a boat, vacation money. Or, home improvements.
That "easy money" is no longer easy to come by. As the rate of appreciation has cooled in the last year, traditional mortgages and HELOC lines are going into default with alarming frequency, most lenders have curtailed Equity Lines for those with less than 10% equity remaining AFTER the line is in place. Many rates are higher as well. And equity loan borrowers with marginal credit histories are being rejected.
Despite the fact that HELOC loan interest is tax deductible in many cases, some borrowers fail to see the reality that loan default here can lose their home for them. This fact can exasperate the problem of tight-money homeowners looking to ride out the present economy.
Please read Marilyn Kennedy Melia's article in yesterday's Chicago Tribune for more details, as well as a partially tax deductible alternative for families who used home equity funds toward college tuition and fees.
DEAN MOSS & DEAN'S TEAM CHICAGO
