Real Estate Information |
|
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. ©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a Website devoted to debt consolidation and credit counseling information and HomeEquityHelp.net, a site devoted to information on mortgages and home equity loans.
MORE RESOURCES: How real estate commission changes could affect buyers and sellers The Washington Post Real estate experts share a message for home buyers as they predict rising home prices through 2025 Fox Business The Folly of China's Real-Estate Boom Was Easy to See, but No One Wanted to Stop It The Wall Street Journal Judge Approves $418 Million Settlement That Will Change Real Estate Commissions - The New York Times $5 billion real estate firm St. John Properties opens office in Plano The Dallas Morning News Agencies' headquarters in DC remained 'nearly empty' in 2023, real-estate board finds Federal News Network Danielle Lombardo Appointed as Chair of Real Estate, Hospitality, and Leisure Division at WTW - Risk & Insurance Workers Comp Forum Top 23 real estate apps for agents in 2024 HousingWire Collins: The changes in the real estate industry you need to know - San José Spotlight San José Spotlight Blackstone's Beleaguered Real-Estate Fund Stems Exodus The Wall Street Journal Fresno real estate spat's solution was in the works. Then one party's demise The Business Journal A Recent Settlement Could Change the Way Real Estate Agents Are Paid Milwaukee Magazine The East End Real Estate Market Report: 1Q 2024 Corcoran Inhabit Just $5.4B in U.S. Office Real Estate Sales in Q1: Report Commercial Observer Margot Spera Joins Alliant Specialty as Senior Vice President in Real Estate & Hospitality Division - Risk & Insurance Workers Comp Forum Reversing the Real-Estate Doom Loop Is Possible. Just Look at Detroit. The Wall Street Journal Inked: Recent LI real estate deals Long Island Business News Homes for Sale in Manhattan and Queens The New York Times Real Estate Forecast Next 5 Years: Steady Growth or Price Correction? Norada Real Estate Investments Law Firm Real Estate Report Law360 Ask The Expert: Vienna shares updates on real estate relationships, fees Niagara Frontier Publications Yo La Tengo, Real Estate and more to perform at Woodsist Festival in Accord in September The Daily Freeman real estate market and insurance Sacramento Appraisal Blog Real Estate Transactions: April 26, 2024 The Recorder Real Estate Roundup: 'The Cove' in Hume sells for nearly $19M and more Fauquier County transactions Fauquier Now The Top 3 Real Estate Stocks to Buy in April 2024 InvestorPlace New national real estate scholarship goes to local youth ECB Publishing REAL ESTATE | The Lofts at Cedar Lake include access to a 245-acre wooded campus washingtoncountyinsider.com 9 Ways Rich Real Estate Owners Save Big on Estate Taxes Business Insider New Mexico SIC commits $550m to real estate funds IPE Real Assets Riverton State Office Task Force to receive updates on site selection, real estate purchase during Friday meeting County 10 News Century 21 Four Seasons Realty expands commercial real estate services Bonner County Daily Bee @properties Christie's International Real Estate Taps Industry Leader to Expand in Fort Worth - CandysDirt.com CandysDirt.com Real Estate Minute – 04-25-2024 KFDX - Texomashomepage.com Prominent Properties Sotheby's International Chatham Borough and Chatham Township Real Estate Report TAPinto.net Rockford Is Now America's Top Housing Market After an Improbable Turnaround The Wall Street Journal Florida & Texas Housing Market Slowdown: Prices Stall as Inventory Piles Up Norada Real Estate Investments JWB Real Estate Companies Announced 2024 Home Giveaway FirstCoastNews.com WTLV-WJXX Top residential real estate sales for April 8-12 in Sarasota, Siesta Key, Palmer Ranch, Osprey, Nokomis Your Observer Jacksonville Police & Fire sets private credit, non-core real estate pacing plans Pensions & Investments Homes for Sale in New York and Connecticut The New York Times Placing a $190 million bet – Potawatomi Casino Hotel's Project First Strike - Milwaukee Business Journal The Business Journals Real Estate Report: Mortgage rates see new high above 7% Hawaii News Now Anywhere Real Estate Inc. (HOUS) Reports Q1 2024 Financial Results Amidst Market Challenges Yahoo Finance Milwaukee Tool's downtown office named Milwaukee Business Journal's Real Estate Awards Project of the Year ... The Business Journals Middlesex County Real Estate Market Shows Robust Growth Amid Favorable Economic Conditions TAPinto.net 200 Housing Markets Are Predicted for Price Decline: Zillow's Report Norada Real Estate Investments Inside Savannah Homes $3.1M Tybee home with panoramic ocean view Savannah Morning News Manhattan Real Estate Update: "Embrace the Boredom" westsiderag.com Business Brief: Local Agents Honored by Weichert Real Estate Affiliates, Inc. for outstanding performance The Commercial Dispatch Real Estate Development Firm Seeking Community Input For Honey Creek Road Property in Rockdale County News-Daily.com First-ever rural-focused Real Estate Development Boot Camp aimed at emerging housing developers Second Wave Michigan Real Estate Development Firm Seeking Community Input For Honey Creek Road Property in Rockdale County Rockdale Newton Citizen Pro boxer Caleb Truax retiring to become Twin Cities real estate agent - Minneapolis / St. Paul Business Journal The Business Journals Final Offer Launches in Canada Bringing Transparency to the Canadian Real Estate Market Yahoo Finance How office market challenges could affect community banks - Milwaukee Business Journal The Business Journals |
RELATED ARTICLES
Why Real Estate Investment? Why should you invest in real estate? Well, investing in real estate for profit is one of the most popular approaches to generating additional income in the United States today. In fact, if you pay attention to recent press you will have seen numerous reports about the real estate investment craze that seems to be sweeping the Nation. Sell your Property Faster Learn how to sell your property faster and at the best possible price. Selling your property quickly and at the highest price is the target for everyone looking to move. Checklist for Buying a Home I had a client who called saying that his bath tub just fallen through the floor in his new home (new to him). Mold had eaten away the floor from the crawlspace up. Boom or Bust For those looking to invest in the real estate market?keep your eyes on the headlines. According to the Federal Deposit Insurance Corp. An Investors 1st and Most Important Lesson Are you ready for the lesson that will put you ahead of 99% of all real estate investors?Here it is in a nutshell ?USE AS LITTLE CASH AS POSSIBLE!The days of mortgage burning parties are long over. But you will still meet people who believe that it is good idea to pay off the mortgage on a property so that they can have big cash flow. Budgeting Your Log Home: Where Do You Start? The Log home industry has matured these last many years, but there is still a lot of confusion about how much a log home costs. Naturally, everyone wants to know the cost of the log package; however, the budgeting only starts here. Selling Houses: Design Psychology and Interior Colors Interior colors are vitally important to selling your home quickly, and for more money. But you must always take your target market and selling season into account, using Design Psychology techniques, when choosing the colors for the inside of your home. New or Old House? A lot of buyers think that a new house is the way to go but it's important to have some knowledge of quality and of the builder. New paint, carpet, doors, windows and cabinets are a quick and easy sell. Searching the Hawaii Property Listings Maui is an island so full of life and vivacity (perhapsbecause of the fact that it was formed millions of yearsago by the eruption of two volcanoes) as well as beingmixed with the enticing calm that you can only experiencewhen you are near the sea. Sounds enticing? All of thesedreams can become a reality by simply searching the HawaiiProperty Listings and making the move. The Value of Building Home Equity There are numerous advantages to owning a home. One of the serious advantages is the equity that is built over time. Moving On: Powerful Tips For Selling Your Home Maybe you're moving to a larger home to accommodate a growing family, relocating for a new career opportunity, or purchasing a townhouse for retirement. Whatever the reason for the move, you'll need to take the necessary steps to sell your home for the best possible price, within a reasonable amount of time. Water, Water Everywhere on the Waterfront Waterfront living is among the most desirable of locations in our area (Florida). The views and vistas are fantastic, not to mention the ability to walk out one's door to drop a line to fish or untie a line to enjoy boating. Real Estate Investing - FSBOs vs. Agent Listings? Many would-be real estate investing professionals face discouragement because of the assumption that acquisitions require deep-pockets. Some even believe the myth that nothing-down purchases are impossible. An Ideal Way to Purchase Your New Home without Strict Banking Regulations You've searched high and low around town looking for thatspecial home for you and your family. Everyone agrees that"this is the one"! Your down payment for the home is largeenough, but you know your credit is terrible, or worse,practically non-existent. Real Estate Website Marketing - 5 Steps to Crushing Your Competition and Doubling Your Business Getting your real estate website more traffic is easy if you know how Internet marketing works, not to mention search engine optimization. Your goal is to get as much traffic as possible to your website, but not just any traffic, targeted traffic. 10 Ways To Find Investment Properties If you really want the best deals in investment properties, you have to increase your odds by finding more deals. Who is more likely to get a cheap apartment building, an investor that looks through the MLS listings and calls it a day, or the one that uses ten resources? Here are the ten:1. Will The Real Home Buying Guide... Please Stand Up? Use Google right now and do a search on, "Home Buying Guide". Take a few minutes to click some of the links to see what's out there and then come right back. A Real Estate Primer There are a great many books and web sites devoted to real estate investing out there, but most of them concentrate on one specific area of investing. It's often hard to find a general description of real estate investing, one that lists the various real estate investing strategies and how to get started. Housing Bubbles and You Are we in a housing bubble? To answer that question first we need to understand what a housing bubble actually is. A housing bubble is what happens when the there is a significant rise in the market that is mostly due to the expectation that the prices will continue to rise. Buying Property in Spain - How to Avoid Paying over the Odds Spain has a lot to offer Northern Europeans and until recently there was a marked difference between the price in their home country and a similar Spanish property. However many buyers have found to their cost that they paid way over the odds. |
home | site map |
© 2006 TIGER MEDIA |