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Impact Of A “Home Equity Loan”
So you’re now all clear on asset, liability and equity and you’re thinking abut getting that advertised Home Equity Loan. Remember what equity actually is: it is the part of an object that you
own.
Once you’ve taken out that $90,000 loan the bank is offering you, how much are you worth? – NOTHING, zip, zero, zilch, niente, nada. Whichever way you want to say it, you don’t own your house or even part of your house anymore. The banks own it. And on top of it, you’ll pay interest on the money you sold your part of the house for. You will have to slowly build up equity in your house again by paying off the principal. – Judge for yourself but it doesn’t sound like a smart deal to me.
(read
on ...)
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