House of Cards?
Home-equity borrowing could be risky business as interest rates rise.
By Scott Bernard Nelson •
Opinions expressed by Entrepreneur contributors are their own.
Home values are way up, interest rates are way down, andpersonal incomes have been way stagnant. Should you tap into thatburgeoning home equity to fix the family room, buy a new car or payoff credit cards? For millions of Americans over the past twoyears, the answer has been a no-brainer. Fueled primarily byinterest rates, the total outstanding value of mortgage debt hit arecord high in recent months-while owners' equity as apercentage of home values dropped to an all-time low.
The reasons behind the surge in home-equity borrowing are bothobvious and compelling. The interest rate on a home-equity loan orline of credit tends to be far less than that on credit cards,interest is tax deductible (unless you get a jumbo loan, worth morethan the value of the house), the repayment terms are spread outand somewhat flexible, and just about anyone with a house hasaccess to the money.
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