Retirement 101 by Michele Cagan

Author:Michele Cagan
Language: eng
Format: epub
Publisher: Adams Media
Published: 2019-12-24T00:00:00+00:00

Use Caution with Home Equity Loans

Many people take out home equity loans when they’re having trouble making ends meet. After all, homes are often the largest asset people have, and it’s very easy to borrow against the equity. That seems like a great idea when home values are high or growing, but the real estate market can turn on a dime (like we saw in 2008). If that happens, you could suddenly owe more money than your home is worth (be “underwater” on the loan). That might not be a huge issue if you’re planning on staying in the house for a long time, but it can cripple your finances if you need to sell before the market rebounds. Remember, with home equity loans, if you can’t keep up with the payments, you could lose your home.

Renovate Wisely

Many new retirees take on home renovation projects, which often leads to taking out home equity loans. Before you start, make sure the renovations you choose will add value to your life and to your home price. Renovations that include making repairs or adding a deck almost always add value; upgrading to top-of-the-line appliances usually doesn’t add value.

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