Quote:
Originally Posted by MAXUM
Not that there is EVER a good reason to tap the equity in one's house, but now especially is playing financial suicide in order to float more debt on historically low interest rates.
Have no sympathy for people that do this kind of stuff and find themselves later on down the line financially ruined as a result. It's not a matter of if - but when.
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On the other hand, banks often encourage mortgage or HELOC because it is strong collateral. Debt management is a skill by itself, of course, not taught in most schools. When the tax code changed to disallow interest deductions on everything except real estate (no more car loans, CC interest, etc) that pushed a lot of people into tapping home equity, inappropriately for many. I can see, for example, swapping a 6% non deductible loan for a 3% HELOC; other assets to cover the debt should be in place, though, right? And a plan to cover cash flow when you suddenly aren't drawing a full paycheck.