New York real estate queen Barbara Corcoran once parlayed a $1,000 loan from a boyfriend into The Corcoran Group, a Manhattan real estate agency with 45 offices, 2,150 sales agents and employees, and an almost unfathomable $5 billion in closings last year.
At a glance
B.A., English and philosophy, St. Thomas Aquinas College, Sparkill, N.Y.
- With a $1,000 loan from her boyfriend in 1973, the former waitress built The Corcoran Group into the premier New York real estate agency, with 45 offices, 2,150 sales associates and employees, and $5 billion in closings last year.
- On Sept. 9, 2001, two days before 9/11, sold The Corcoran Group to NRT, an affiliate of Cendant Corp., for an estimated $66 million.
- In 2005, resigned as chairwoman of The Corcoran Group to found her own television production and business consulting company, Barbara Corcoran Inc.
- Frequent real estate contributor to the "Today" show, "Good Morning America" and CNBC.
- Published her memoir, originally titled "Use What You've Got," in 2003. Disappointed with initial sales, she gave it a sexier title, "If You Don't Have Big Breasts, Put Ribbons on Your Pigtails." It became a best-seller.
Did you know she once used a home equity loan to stay afloat?
Bankrate connected with the effervescent "Today" show real estate correspondent to get the lowdown on the prudent -- and imprudent -- uses of home equity loans and lines of credit.
How have you used home equity?
I've only used it once. In 1988, I remember I got 110 percent financing from a very friendly mortgage broker on a country home, a renovated school house in Pawling, N.Y., and I used that money to float my business because I was going to go down. It was either that or sell the house, and that would have broken my heart. The money did float the business for about seven or eight months, I drained it right down, and I also paid for the mortgage with it, but it saved my business. I only did it because Citibank, at the time, had a credit line for me that I never used, and then when I needed it and pulled it, they closed it down -- the first $10,000, BOOM! I thought credit lines were there for the trouble times; that was an interesting business lesson. But then my good old house saved the day. I still have it. I was able to pay off the entire mortgage on it two years later because the business was doing so well, so the business returned the compliment, I guess.
What is the biggest misunderstanding about home equity loans?
I think most people only think of it as when you're really desperate. It's almost sacrilegious to tap into that before you're ready to sell your house. So I think it has a negative connotation in most people's minds. I think most people assume that it ends in trouble, and for many people it does; it depends upon what people use it for.
What are the best uses of an equity loan or line of credit?
I know two couples where the husband lost his job, and I think the best use of it is as an insurance policy to bridge the gap in a job loss. I think that's the single best use. The second best use, I would say, is for college tuitions, because it's very hard to accumulate that kind of cash for your kid. For one of these couples, it made the difference between the kid going to a great school that they qualified for and going to a state college. I thought that was a great use of it. And the third best use is for home improvement -- if someone is tasteful. I've seen many people use it for home improvement without the right taste level and it doesn't improve the value of the home. It depends on the taste level whether that's wise.