Home Equity – Don’t Spend it on Risky Investments

Written by Charles Essmeier


The housing market has exploded inrepparttar last five years, and homeowners are finding thatrepparttar 150292 equity in their homes is greater than it has ever been. The equity in a home isrepparttar 150293 difference betweenrepparttar 150294 market value ofrepparttar 150295 home andrepparttar 150296 amount still owed on it. As home prices increase, so doesrepparttar 150297 equity for those who own their homes. In parts of California, home values have tripled duringrepparttar 150298 last five years, and homeowners are doing increasingly risky things with their newfound “wealth.” Anyone considering borrowing against their home’s equity should carefully considerrepparttar 150299 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, asrepparttar 150300 house is collateral for a loan that improvesrepparttar 150301 house itself. As a bonus,repparttar 150302 improvement usually increasesrepparttar 150303 value ofrepparttar 150304 home, makingrepparttar 150305 loan even safer forrepparttar 150306 lending company. Occasionally, homeowners default on such loans, butrepparttar 150307 foreclosed property can easily be sold to recouprepparttar 150308 loss. Times have changed, and many, if not most, home equity borrowers are now usingrepparttar 150309 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

Auto Loans: Don’t Dig a Money Pit in Your Garage

Written by Joel Walsh


Chooserepparttar wrong auto loan and you might drastically increaserepparttar 150283 chances of defaulting and losing your car. Find out step-by-step how to avoid a money pit.

Car loans are certainly less costly than home mortgages, student loans, or other kinds of loans. So why do so many people end up defaulting and losing their cars? Find out these hidden dangers:

Biggest Hidden Car Loan Danger: The Inherent Money Pit

Unlike home mortgages, student loans or other big-ticket loans, car loans are inherently money pits. A house can build equity; higher education can increase earning potential; even jewelry can sometimes be re-sold for as much as was paid for it. If you borrow to buy one of those things, you may eventually get a return on investment. But every single car loses significant value and keeps losing it as time goes by.

Unlike home mortgages, student loans or other big-ticket loans, car loans are inherently money pits. A house can build equity; higher education can increase earning potential; even jewelry can sometimes be re-sold for as much as was paid for it. If you borrow to buy one of those things, you may eventually get a return on investment. But every single car loses significant value and keeps losing it as time goes by.

Solution: spend as little on your car as possible.

Of course, in order to spend as little as possible overrepparttar 150284 life ofrepparttar 150285 vehicle, you need to get a well-made, fuel-efficient car, rather thanrepparttar 150286 one withrepparttar 150287 lowest price onrepparttar 150288 windshield.

But a pickup truck, SUV, sports car, or "luxury" model is a guaranteed money-loser. Don’t worry about what other people will think. Think about it: when wasrepparttar 150289 last time you saw an expensive automobile and thought, "I really like and respect whoever owns that!"

The best buy? Many economists actually recommend buying a used car that's a year or two old. That way you can actually benefit fromrepparttar 150290 fact that cars only drop in value. Even a car that’s just six months old may offer you a substantial savings. Just have it inspected thoroughly so you don't lose what you've saved on maintenance payments.

Hidden Car Loans Danger: Dangerously High Monthly Payments

Unfortunately, most people never figure outrepparttar 150291 total cost before signing onrepparttar 150292 dotted line. They end up staying up late at night trying to figure out how to make ends meet. They live in smaller houses. They skip going out at night. They don’t go on vacation.

All that sacrifice to have a brand-new SUV inrepparttar 150293 driveway!

Take a hard look at your finances, and figure out how much you can pay total each month for your car. Be sure to take into account insurance, tax, maintenance, and fuel. Usually, when people actually do calculaterepparttar 150294 total monthly cost ofrepparttar 150295 car they’re considering buying, they’re amazed by how high it is.



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