Can a Home Equity Loan Help You?

Can a Home Equity Loan Help You?Banks and other lenders often eagerly offer a home equity line of credit to homeowners in good financial standing. The terms may be tempting: A low interest rate applied to the property’s equity or current paid value accessible with a debit card or bank transfer as needed. With a home value that exceeds what is currently owed on the balance of the mortgage loan, it makes sense to use those funds for immediate needs, like remodeling the kitchen or building a patio.

But home equity loans are not reserved just for home remodeling or repairs. Available credit on a property’s value can be used for anything that a regular credit card can buy. Consequently, it is easy to spend that money when it becomes available through a home equity line of credit. This is done by applying for a loan, with the property used as collateral against the loan. So, if something happens to prevent you from repaying the loan, your home can be taken by the creditor, and you will lose it. In effect, a home equity loan is a second mortgage on your property.

Many homeowners don’t want to risk losing their property by taking out a second mortgage based on their home’s equity. Keeping up with the regular mortgage can be hard enough, especially if you become unemployed in losing your job or are able to work only part-time. Having two mortgages to repay increases stress and the financial burden of meeting payment due-dates. Trying to sell the home to get out from under the mortgage payment becomes extra difficult, as the second mortgage will have to be paid first by the homeowner or from the proceeds of the property’s sale.

However, under the right circumstances, a home equity loan can be very helpful. First, it allows you to make use of the equity accrued on your home rather than letting it sit idle. If your home is worth $150,000 and you still owe $70,000, there is a substantial amount of available credit in your home’s equity. Keep in mind that the lender will advance a percentage of the current equity, on average about 85 percent, balanced against your income and any other outstanding debts.

Second, interest paid on a home equity loan can be claimed as a deduction on your tax return. Certain conditions may apply, so you will need to discuss this with your accountant or carefully read the tax rules if you prepare your own returns.

Third, home equity loans are often approved at lower interest rates than standard credit cards or credit accounts. A line of credit against your home’s equity could be the cheapest way to finance a college education or a dream vacation. The main thing is to be sure you can afford the monthly payments with low risk of default.

A home equity loan is a convenient source of credit that may be readily available at your fingertips, depending on your home’s equity and your other financial obligations. If you are thinking about borrowing money for a substantial but necessary or long-planned purchase, contact a lender who is offering great terms on a home equity loan. Then compare the advantages and terms with other credit offers currently available.

How To Beat The Odds At The Casino

That feeling of winning at the casino is incredible. The elation of watching your number come up or that ace coming through at the right time is unmatched. The players at Magical Vegas – the popular online casino could well reveal their top gaming experience while playing exciting games such as online slots, roulette, poker, and even the exciting live casino games with a real dealer. Do you want to know how players always have a great time on the Vegas favorite games at MagicalVegas.com? Read this guide to beating the odds at online casino games. Every table game, from craps to blackjack to baccarat to roulette, we break down all the tips to get you that jackpot you have been searching for.

Check The Payout

Make sure you are playing the games with the best odds. Lots of casinos have dressed up their rooms with hot girls in short skirts. But look past all that glitz to see if the payout has been trimmed. Chances are they have doubled the house’s advantage by going 6/5. That means a $100 bet gets you $120, rather than the traditional $150.

Find the Marks (on the Dealer Side)

Clumsy dealers are a pit boss’s worst nightmare. But they can be your best friend. And with all the tables to watch over, some pit bosses might miss the guy tripping over himself to hand out winnings. Keep an eye out for that negligent blackjack dealer that is flashing a look at the face-down card. Much more efficient than learning how to count cards. Unless you are a Mensa member, you probably can’t do it.

Stop. For Real.

When you are up at the roulette table, get a move one. Stash some of those winnings away and move on with some play money to the blackjack table. You will thank yourself later. The more you spin the wheel, the better the odds get for the house. The casino knows exactly how it is going to break even: 30,000 hands on the roulette wheel. So do what no one does: Quit while you are ahead.

Stick With It

The more you play, the better you will get. Practice makes perfect. Well, maybe not perfect, but at least you can shoot for profitable. The more hands of baccarat or poker you play, the better you get. Practice on computer games at home, so you get to understand the odds and see the hands over and over again. Then, go out and bet your hard-earned cash.

Embrace the Boring Side

The games with the worst odds for players are always dressed up with flashing lights and colorful signage. Stay away! On the craps table, the flashiest, most visually attractive bets, like the field or “any 7,” are the most colorful. Avoid those like the plague. Stick with the safe, boring bets.

Wear A Watch

Casinos famously have no clocks. Many prevent their dealers from wearing watches. It pays to have the easy marks, like you and your friends, lose track of time. Wear a watch and check it often. When you are on a winning streak, cash in and go enjoy wasting time at the pool. You are always one bad beat away from being in the hole.

So that is it. Follow all these rules and you will find yourself on the winning side of the ledger more often than not. And stash that cash away, so you can come back to play another day.

When it Comes to Reverse Mortgages, Suze Orman is Dead Wrong

I am a big fan of CNBC. But when it comes to financial advice the talking heads on CNBC are often more interested in their own ratings than in giving quality direction. Case in point is Suze Orman. Don’t get me wrong, I think she is colorful, and some of her advice is worth following. However, there are times when Suze is dead wrong, and if you ask me, her advice on reverse mortgages is one of those instances.

Today’s retirees have been faces with some of the deepest economic crises this country has seen since the Great Depression. If you can remember, there was the savings and loan crisis in the late-80’s and early-90’s. In Connecticut alone, it appeared that almost every bank in the state closed within one week in 1991. Then we had the dot-com bubble, which was particularly mean to almost everyone’s 401k. Next up was the housing bubble, which saw prices run up to historic levels only to come violently crashing back to earth. This precipitated the Great Recession, and while the economy has for the most part recovered, the recovery has been uneven at best.

For seniors who have had to withstand 25-years’ worth of economic volatility has left them with little breathing room. As such, I can understand when soon-to-be retirees look at their savings and realize they don’t have enough money saved up. In some cases, the only asset they have which is worth anything is their home.

The only challenge is that they probably have a mortgage outstanding. Even if the interest rates are not too bad, they are struggling month-after-month to make sure they remain current. So, the opportunity to save thousands every month on mortgage payments can often be welcome relief.

Now this is not to say that a reverse mortgage is a panacea. The truth is that it is not for everyone, but financial planners and savvy investors understand that getting a reverse mortgage is a retirement tool which shouldn’t be dismissed.

Especially since the government revised the rules for these mortgages to make sure that lenders were checking a borrower’s ability taxes, insurance, and utilities on the property in question. You see this was not always the case and the new rules have helped to ensure that unscrupulous lenders are not preying on seniors. This is a big plus and it helps keep seniors in their homes.

Another thing which everyone needs to know about reverse mortgages is that these government-insured loans are non-recourse loans. This means that even though the interest on the loan will accrue over the life of the loan, the bank cannot go after you, your estate or your heirs in cases where the accrued interest plus the principal is more than value of the house.

However, this does not mean that all reverse mortgages are non-recourse loans. You need to check the fine print with a trusted adviser when getting your loan. This is especially true when you are getting a jumbo loan or any other version of proprietary reverse mortgage as they are not insured by the government and may be subject to different rules.

As you can see, the devil is in the details. But this is true with almost everything in life and to a certain extent, Orman’s advice on reverse mortgages is more histrionics than solid financial advice.

Again, I am not saying that reverse mortgages are for everyone. But there are legitimate instances when these loans should be considered, even when only one of the spouses is over the age of 62. But to blindly label reverse mortgages as a ‘last-resort emergency fund in retirement’ does not do this tool justice.

In some cases, a reverse mortgage might make sense as an alternative to borrowing against one’s 401k account. For example, you have just had a major medical incident and you need the extra money, or maybe the housing prices in your area are at or near highs, or even as an alternative to purchase a new home in retirement.

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