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  Home Equity Basics   Chapter 4: Watch out!
Tapping your home's equity can be risky. Understand all the details before closing on a loan.
 
   

Risks of high LTV loans

 

High loan-to-value products raise a borrower's debt level above the value of their home to as much as 125 percent.

For example, if you have a house worth $100,000, a first mortgage of $90,000, and a home equity loan of $35,000, you owe $25,000 more than your house is worth. That's crazy. It's an unsecured loan, like a credit card.

Imagine selling your home and having to pay off the mortgage, plus having to come up with $25,000 at closing to pay off the home equity loan. Also consider that the interest on the amount that exceeds your home's value is not tax-deductible.

-- Updated: April 1, 2006
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Home Equity
Compare today's rates
NATIONAL OVERNIGHT AVERAGES
$30K HELOC 4.38%
$50K HELOC 4.11%
$30K Home equity loan 4.98%
Rates may include points
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