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Home Equity Basics
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home equity
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.

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Use home equity loan to pay for school?

Dear Dr. Don, I wish to help my daughter pay for nursing school by getting a $70,000 home equity line of credit . She would like to pay it off in the next 15 to 20 years. One variable-rate option carries a cost of the... Read more

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