Investing in Real Estate with Home Equity? [#AskBP 007]

http://www.biggerpockets.com/askbp007 – In this episode of the #AskBP Podcast, Brandon Turner explains how exactly to utilize your property equity to acquire financial investment properties. You will find out the essential difference between financing and a line of credit, as well as whenever (and when) to utilize each on particular real-estate discounts. Also, Brandon addresses the negative facets of utilizing your home equity, and finishes with a tale of exactly how his in-laws used their equity to buy an amazing duplex.
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Real-estate Professional Tony Joe and Mortgage Broker Specialist Sharon Mitchell show how you can take equity from your own home purchasing investment residential property, making use of a real-life example predicated on home Tony sold to a customer in 2003. www.tonyjoe.ca

Dave Ramsey Wrong On Home Equity Loans? Do You Agree With This?

This FREE book reveals how to pay off your home in 5-7 years on your current income. http://bit.ly/2fi3RqU

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Dave Ramsey is great but does he have it wrong on home equity loans? Should you pay cash for a home even if you can? We talk about it here.

Hey – Do you agree with me? Disagree and think I am way off base?

Leave a comment below and let me know.
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How To Use A Home Equity Line Of Credit (HELOC) To Pay Off Your Mortgage In 5-7 Years

How To Use A Home Equity Line Of Credit (HELOC) To Pay Off Your Mortgage In 5-7 Years

Get our FREE book that reveals how to pay off your home in 5-7 years on your current income: http://bit.ly/2g92pbQ

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If you are wanting to pay off your home faster on your current income, you should look at getting a home equity line of credit or a HELOC as they are called and you can pay off your home in 5-7 years. This video shows you how.

Transcript

Hey gang, Michael Lush. I’m a fourteen recovering mortgage banker. What I want to talk to you about today is the basics of what we teach, using a home equity line of credit to pay off your mortgage in five to seven years literally without changing your budget. What I want to explain to you guys today is a little concept that I came across about four years ago. I had a mentor of mine, a very wealthy individual, explain this to me. One this that he explained to me is that a checking and savings account is actually a liability. I always thought of it as asset which really surprised me.
I thought if you had a bunch of money in your checking and savings account, that’s quite a bit of an asset. In fact I was completely wrong because today banks are giving you about a zero percent rate of return on your checking and savings account. However inflation is going up on average about one point six percent. Technically your money is moving backwards. What he explained to me is that money cannot remain stagnant, it’s either got to north or south.
You’re actually losing money every day by putting your money in a checking and savings account, thus your checking and savings becomes a liability. What we’re going to do is we want to show you how to bypass that systemic problem and actually use a home equity line of credit as your checking account, because what’s cool about a home equity line of credit is it’s open ended. Money can move in and out freely, twenty four seven, three hundred and sixty five days a year. Instead of using your checking account and allowing the bank to then turn around and give your own money back to you in the form of mortgages, credit card and car loans, we’re actually going to use a home equity line of credit. You’re going to deposit all of your money into a home equity line of credit just like it was your checking account and then you’re going to pay your bills out of it just like you would as a checking account.
By doing that you’re actually going to accelerate the payoff of your mortgage and cut your mortgage at least by one third. Hold up. I don’t think that’s right. You’re cutting by two thirds actually. You’re getting it paid off one third at a time. Instead of having thirty years to pay for a mortgage you’re actually going to get a home equity line of credit using your existing cash flow and nothing more, not paying more, not paying less, just changing where your cash goes and you’re going to get a home equity line of credit paid of in five to seven years.
Now this is the basic concept of what we teach. We actually go further in depth and we get in some extremely advanced strategies that can accelerate it even further. This is a great tool to build wealth and we get into those as well. Be sure to check out our other videos and subscribe to our channel here. Look forward to hearing from you. Take care gang, God bless. Thanks for watching the video, if you like that one I actually picked two more for you that you can watch right here. No.
Speaker 2: The other way, point the other way.
Michael: This way?
Speaker 2: Yeah.
Michael: Actually I picked out two more for you that I’d like for you to watch. When you get done I’d also like to you subscribe to our channel, take care.

Pros and Cons of a Home Equity Line of Credit (HELOC)

Pros and Cons of a Home Equity Line of Credit (HELOC)

This Free book reveals how to pay off your home in 5-7 years on your current income: http://bit.ly/2eV2AaP

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Transcript

What are the advantages and disadvantages of having a home equity line of credit? First, a home equity line of credit offers a lot of flexibility. One, it has a very low payment, an interest only payment. That can also be a disadvantage depending on how you treat it. If things were to get tight at the end of each month and a surprise came about, what you’re required to make is going to be substantially lower than what a typical mortgage is. But keep in mind, if you make that minimum payment, you’re on a treadmill. You’re not going to get anywhere.

Also, it’s open-ended with simple interest. It allows you to deposit 100% of your income with confidence that you can get that money back out to pay your bills. What’s left over is sitting in there driving down the average daily principle balance, which drives down the amount of interest that you pay, and ultimately gets it paid off much, much faster than a mortgage.

A huge advantage with a home equity line of credit is no closing costs. Typically banks don’t charge any type of lender fees and they will even compensate you for your title fees. Now, it depends on what state you’re in and how large your loan is but if you’re around the 0,000 to 0,000 loan amount, you can expect the bank to pay all of your fees and not include them in loan like typical mortgage lenders do. We’re talking actually pay it on your behalf. A lot of banks don’t even require an appraisal. There’s never mortgage insurance with a home equity line of credit. It doesn’t matter if you’re borrowing 85, 90, or 100% of the value of your home. A home equity line of credit never has mortgage insurance.

In some of the disadvantages of having a home equity line of credit is really not the product itself. It’s really the person using the product is a disadvantage. What I’m talking about there is discipline. What are you doing with your money now? You’re putting all of your money into a checking account. All we’re asking you to do is to replace your checking account with your home equity line of credit and you’ll be just fine. It’s discipline. That is the disadvantage of having a home equity line of credit. It’s folks not actually following through on that. If you don’t follow through on it, it’s no better than having a mortgage. It’s not worse, but it’s no better.

Another disadvantage is if you actually do perform the strategy, you’re going to find that you’re going to have access to a large amount of equity pretty fast. What are you going to do with that equity? Are you going to leave it in there and continue to pay off your debts or are you going to cash out to go buy an S-Class Mercedes? You’re buying a liability, not an asset. I am an advocate of pulling money out of your home equity line of credit to buy things that are assets. In fact, very specific assets. Dividend paying assets.

Those are the disadvantages of having a home equity line of credit. There is a perceived disadvantage of having a home equity line of credit because the rates typically are variable meaning they can change at anytime and go up or down. The reason why I say that’s perceived, it depends on how you treat the home equity line of credit. If you treat it like it’s your checking and savings account, and your cash flow positive, you’re interest rate immune. What that means is, you’re actually reducing the principle much faster than the rise of interest rates. There are quite a few banks that offer fixed rate home equity lines of credit so you don’t even have to worry about that if you didn’t want to.

If you like this video, be sure and “Like” here. Subscribe to our channel. Take care. God bless.

You guys are still here? Awesome. Click somewhere on this screen. I’m not really sure where but I’ve picked out two more videos that I believe you’ll find a lot of value from. Take care. God bless.
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Watch more Home Finance 101 videos: http://www.howcast.com/videos/418268-How-to-Get-Equity-from-Your-Home

If you have paid off a good portion of your house and its value has appreciated, and you find yourself in need of some extra cash, you may consider taking out a home equity loan.

Step 1: Assess your risk
Assess your risk. Borrowing against your home equity depletes your investment, and reduces the cash you can take out in an emergency.

Step 2: Learn the tax rules
Familiarize yourself with the tax rules governing home equity borrowing. To deduct interest you have to itemize, which cannot be done if you have too few deductions.

Step 3: Consider your borrowing options
Consider your borrowing options. A home equity loan is secured by house to the extent the fair market value exceeds the debt incurred when you purchased it. A home equity line of credit is a form of revolving credit in which your equity in your home serves as collateral.

Tip
Consider applying for a reverse mortgage loan if you are at least 62 years of age and occupy the home as a principal residence. A reverse mortgage is a loan against your home that you do not have to pay back as long as you live there.

Step 4: Decide on a loan type
Decide whether a loan or line of credit will best meet your needs. In general, a loan is best for short-term borrowing or when you need the money in an emergency. A line of credit is best if you want to lock in a low interest rate.

Step 5: Apply
Apply for the loan or line of credit. Be careful about signing up for application or appraisal fees. If you have good credit, you should not have to pay these fees to borrow against your home. With the appropriate steps, you’ll secure some cash — and maybe even use it to increase your home’s value.

Did You Know?
Some experts estimate that less than a third of home equity borrowing is used for investments, with the rest being used for debt consolidation, vacations, or purchases that depreciate quickly.
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Understanding Home Equity

Description
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This video explains what home equity is, explains the aspects that boost or decrease house equity, and offers a formula to calculate house equity.

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The aim of Michael’s life should boost accessibility knowledge so all people can achieve their hopes and dreams.
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Great Benefits of A 125 Home Equity Loan

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gnuckx Do you know what a 125 home equity financing is? I’m sure you know everything about conventional home equity lendings where you can obtain money using the equity in your house as collateral for the loan. These house equity finances give lots of people with money for a vast array of uses. Certainly there are other kinds of equity fundings besides the typical residence equity lending, and the 125 home equity car loan is just one of these alternatives. A 125 house equity financing allows you get back at a lot more cash compared to normal based on the equity in your home.

Allow me initial specify just what equity is. Your house equity is fairly just the difference in just what you owe the financial institution still and the worth of your home. As an example, if your house is valued at $ 300,000 and you still owe $ 150,000 to the home loan company after that you have $ 150,000 in equity. One nice benefit is that in a rising property market you acquire extra equity just with the surge in your houses value.

Conventional Home Equity Financings vs. 125 Residence Equity Fundings
In a traditional residence equity funding you are provided a financing that does not go beyond the quantity of equity existing in your house. So, if you have $ 25,000 in equity you’re able to get a financing for $ 25,000. This finance could be used to spend for anything you desire from house improvements to education or perhaps a trip if you choose.

The difference between the conventional home equity lending and also a 125 house equity lending is in the quantity you can borrow. With a 125 residence equity financing you could obtain up to 125% of today equity value in your house. In this instance if you have $ 25,000 equity in your house you would certainly be supplied a car loan of $ 31,250. In the previous several lending institutions would shy away from this kind of car loan since part of it is unprotected as well as increases their threat. Nowadays nonetheless an increasing number of lenders, especially on-line lending institutions are supplying 125 house equity fundings. If you’re thinking about obtaining this kind of lending you must understand that a high credit scores score will assist you considerably in obtaining authorized.

125 House Equity Funding Warning
The 125 residence equity finance is specifically matched for those that require accessibility to a huge quantity of cash. If you are considering making use of the loan to start a company or handle a huge home improvement project a 125 home equity car loan can fulfill your needs quite well.

< br/ > Remember that as lengthy as home worths continue to rise or at the very least stay stationary you’re in little risk from this type of equity lending. Nonetheless, if your house worth declines your equity will decrease also as well as you can in fact wind up owing greater than your residence is worth.

It actually depends upon your requirements and conditions to figure out what does it cost? sense a 125 home equity lending creates you. As I said previously, it can be extremely useful for those beginning an organisation, specifically if you expect business to have excellent cash money flow. It is likewise valuable for huge residence renovations because they are likely to raise your home’s value as well as your equity. Simply be careful that you don’t exhaust on your own when taking a 125 house equity finance.

For more information regarding 125 residence equity loan and refinancing your residence mortgage please go to the authors site.

What is Home Equity?

Home equity is the market value of a homeowner’s unencumbered interest in their real property—that is, the difference between the home’s fair market value and the outstanding balance of all liens on the property. The property’s equity increases as the debtor makes payments against the mortgage balance, and/or as the property value appreciates. In economics, home equity is sometimes called real property value.
Technically, home equity has a zero rate of return and is not liquid. Home equity management refers to the process of using equity extraction via loans—at favorable, and often tax-favored, interest rates—to invest otherwise illiquid equity in a target that offers higher returns.
Homeowners acquire equity in their home from two sources. They purchase equity with their down payment, and the principal portion of any payments they make against their mortgage. They also benefit from a gain in equity when the value of the property increases. Investors typically look to purchase properties that will grow in value, causing the equity in the property to increase, thus providing a return on their investment when the property is sold.
Home equity may serve as collateral for a home equity loan or home equity line of credit (HELOC). Many home equity plans set a fixed period during which the person can borrow money, such as 10 years. At the end of this “draw period,” the person may be allowed to renew the credit line. If the plan does not allow renewals, the person will not be able to borrow additional money once the period has ended. Some plans may call for payment in full of any outstanding balance at the end of the period. Others may allow repayment over a fixed period, for example, 10 years. http://www.garguniversity.com
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Latest Home Equity News

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