December 16, 2022 • 14 mins
Do you own a home with a ton of equity?
In this episode, I talk about the awesomeness of a Home Equity Line of Credit (HELOC).
I cover the pros, cons, and how they compare to other options that may be available to you.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Lucas Casarez, CFP (00:00):
sometimes I am hesitant to recommend a home
equity line of credit if I'mworried that my clients.
Are not actually going to manageit well.
So if I'm worried that they'rejust gonna tap into it and do a
lot of crazy stuff
(00:35):
dIT DIT, DIT DIT disclaimer,alert.
This information is foreducations.
Don't just go use it firstconsult with your financial
advisor because that's way morelegit.
That's it.
That was Orlando Gomez and youcan catch him in season three,
episode four on how he brokeinto tech by writing a jingle.
(00:55):
Hello, thank you for joining Techie Personal
Finance Bootcamp.
Thanks for joining me today.
I'm gonna be talking about HomeEquity Alliance and credits also
called HELOCs.
And they're awesome.
They're super flexible.
They're gonna be super relevantto everything going on today,
right now with financial stuff,with life stuff, with work
stuff.
So I'm gonna be diving into allthat, the primary reason.
(01:19):
kind of this has been sitting inmy mind for quite a while, is
because I'm constantly hearingnews ads on this radio station I
listen to where they're tryingto talk people into doing a cash
out refinance for their homemortgage, even if the new
interest rate now is higher thanthat of what they had before.
So it's kind of crazy.
They're trying to talk peopleinto getting a.
(01:43):
Mortgage at a higher interestrate and giving up the old
super, super low interest rate.
And they're saying you should dothat because of credit card debt
to go on vacations, they're,it's definitely bad advice.
But obviously it'sadvertisement.
They're trying to make morebusiness for themselves.
They don't necessarily careabout that.
The end person being hurt bymaking such a, a poor financial
(02:03):
decision.
So if you.
There was a reason to tap intofunds.
A home equity line of credit isgonna be a good option where
you're able to do those thingswithout refinancing the whole
loan at a new higher interestrate.
So that's one thing.
Another secondarily reason thatthis has been kind of top of
mind is the fairs of recessions,the stock market and, and
(02:26):
everything that's going crazyright now.
So one of the things you can dobest, there's a lot of things
you can't do that are out ofyour control with regards to the
recession, but one thing you cando is.
build up emergency savings ifyou don't have an emergency
savings built up.
Well that's something where ahome equity line of credit might
be super helpful.
And so let's get into the justkind of nuts and bolts.
(02:46):
What is a home equity line ofcredit?
How does it work?
So first off, you have to have ahome in order to, to have a home
equity line of credit.
And the reason for that isbecause you're gonna be using
the equity that you have builtup in your home to be able to,
to use and leverage in case ofemergency, in case there's
different opportunities thatcome up.
and for example, if, if someonewere to have purchased a house
(03:08):
three years ago for 400,000, butnow it's worth 500,000, Well,
they have a hundred thousand inequity just from the growth.
But they also may have made adown payment.
They also may have made likematerial updates to their home
and increase the value that way.
So there's additional ways youcan increase your equity besides
the equity just going upnaturally on its own.
And so that's a huge resourcethat typically it's, it's stuck
(03:32):
there.
You can't, can't use it unlessyou follow that bad advice of
the commercials and, and cash.
The take some cash out of yourhome and do a refinance, but as
I kind of highlighted, thatwould be a horrible mistake
right now, just cuz interestrates are about 3% higher, most
likely than the mortgage thatyou have originally.
And you don't wanna do that forlarge balances.
(03:54):
If you have$300,000 on yourmortgage you don't wanna go from
a 2.75%.
To a 6% mortgage all becausethey're saying that you should
take the money and go onvacation and unlock yourself in
at a higher rate.
Definitely don't do that.
So, The reason why I love homeequity lines of credits, and you
might have heard of anotheralternative just called out home
(04:16):
equity loan, a little bitdifferent.
And here's the biggestdifference I'll mention right
now.
So the thing I love about thehome equity line of credit is
you actually don't have to takeout money if you don't need to.
What a home equity line creditdoes, it's kind of like a.
Between mortgage and your creditcard.
So the cool thing about yourcredit card is you can have it
(04:37):
just in case emergency.
You can have it just in casethere's an opportunity that
comes up and you don't need topay any interest on it if you
don't borrow funds.
The home equity line of creditis the same way if you don't
need the funds.
Well then you don't need to payinterest on anything.
It just sits here as a reserve.
You'll get pre-qualified forwhatever that line of credit
number is.
So maybe you get a, a$50,000home equity line of credit.
(05:00):
You're not paying interest onthat unless you start borrowing
it.
And then you can do it indifferent waves.
You can.
Borrow a big chunk of it.
You can borrow a smaller chunkand you can pay it down, make
payments, and if you makepayments, then that means
there's more for you to borrowagain in the future in case you
need access to it again.
So that's how it works, like acredit card.
And it's definitely differentthan a mortgage.
With your mortgage.
(05:20):
You pay down your mortgagepayments, you don't get access
to the equity as that's goingalong unless you have something
like a home equity line ofcredit set up.
So super flexible.
You have it just in.
Don't need to use it.
And there's basically no feesmost of the time.
It, it does depend on thelenders.
Some lenders will definitelycharge you for a closing car,
(05:41):
titling if there's an appraisaland things like that.
But what I've been seeing for myclients that I've been looking
at different options like thisfor is, they're most of the
mortgage companies, the homelender, they're saying, you know
what, if you get a home equityline of credit with us, we're
gonna cover those costs.
And for the most part, I've seenthem come in as pretty close to
$0 basically to get those thingslined up.
(06:03):
So that's a nice, huge abilityto borrow against these funds if
you need it.
Super flexible and very low costif you don't need anything.
And, and if you do start toborrow another great benefit.
Well, the rate is gonna be a lotlower than what it would be on a
credit card.
Credit card.
Interest rates right now isabout 22, 20 3%.
So very painful if you actuallyborrow funds and are unable to
(06:25):
make that credit card payment infull.
Cuz you'll start accruing 22%interest for home equity line
credits.
I was looking right before thefed increased the rates, but
last week I was seeing as low as5.25.
Saw a lot of 6%, so 5.2.
or 6%, if you did need to borrowmoney outta your home equity and
and are unable to pay that backquickly, that's gonna be the
(06:47):
rate that you're gonna pay itat.
One potential downside is therate typically is gonna be a
variable rate.
So even if it said 5.25% and youopen up a home equity line of
credit, now if interest rateskeep rising, it's possible that
interest rate might go up by thetime you start using it.
One benefit in future thatyou'll wanna look.
(07:10):
when you take out a home equityline of credit is a lot of times
they'll allow you to block in arate after you actually borrow
funds.
So they won't let you lock in arate, right?
When you get the home equityline of credit.
But let's say for example, youborrow$10,000, they'll say, Hey,
if you wanna lock this in, thisis the rate.
You can do that.
And you can say, yep, let's lockthat 10,000 I borrowed at
(07:30):
whatever that rate is.
Then you don't have to worryabout interest rates moving on
your or.
Another interesting feature thattypically I don't recommend
people use unless it is truly acase of emergency, but a lot of
home equity line of creditsactually only required that you
pay the interest only.
So if you borrow 10,000, like inthat example, and the interest
(07:51):
rate is 3%, well that would beabout$300 eight.
You'd end up paying over thecourse of the year for that and.
if that's all you could affordor if that's all you wanted to
pay, you could just pay thatover the course of the year, not
pay the principal down so that10,000 would still be owed and
you can just kind of keepcarrying that forward.
What I've seen most often is youcan do that for typically 10
(08:12):
years, so it's called a 10 yeardrop period.
after that, then there's a 10year repayment paired, so they
do want you to start paying itback eventually, but they're
super flexible.
They'll allow you to just paythe bare minimum, just pay the
interest accruing and not paydown the principal balance, and
then you can go ahead and paythat down.
In that second set of 10 years,the following 10 years, it will
(08:33):
be the repayment period.
During that repayment period.
Typically, they're not gonnaallow you to borrow any more
funds out, so you'll definitelywanna plan accordingly if that's
something that you're interestedin and want to do kind of long
term.
for most of my clients becausethe interest rate is a little
bit higher, being in the fiveand 6% range versus 2.75% range
(08:53):
for a normal mortgage.
I don't necessarily recommendnot paying it down or not having
a game plan for paying it down.
So that's something that's, youcan kind of decide where your
goals are in, in situations, butthat's where it's super helpful.
In case of emergency,Recession's, something that
you're worried about.
You lose your job.
You didn't quite build up theemergency savings or where you
(09:15):
wanted it to be.
I have a lot of bootcamp clientsthat just finished a bootcamp,
took a couple months to landtheir first position, kind of
burnt down through their savingsa little bit.
in something like a home equityline of credit.
If they had something like thatestablished ahead of time, they
could borrow against the homeequity line of credit, have a
very small required payment, anduse a home equity to kind of
(09:36):
carry them through those toughmonths.
while they're trying to build uptheir.
savings accounts or if they arelaid off in a time like that,
there's no urgency to have topay it back quickly and they
have a nice buffer to supplementany emergency savings they were
able to build.
So that's another situationwhere it might be super helpful.
Other reasons why people mightuse something like a home equity
(09:57):
line of credit.
So emergency savings mentionedthat.
Business venture businessopportunity.
This is a real life example.
That was something that me andmy wife were gonna implement.
If you've ever heard by a storyof how level up financial
planning came to be, I gave mywork two months notice.
At the same time we were goingthrough the home equity line of
credit application process.
(10:19):
I think we were a week out fromclosing, and so I gave.
Worked two months notice.
Ended up being about two tothree days later.
I was no longer working there.
And once that happened, I nolonger had the income to support
getting a home equity line ofcredit.
So the game plan was to havethat in place.
And, and I thought the twomonths it was gonna be good kind
of runway buds since it ended upbeing two days.
(10:40):
That didn't work out, but I wasgonna use it for a business
venture, kind of just in caseemergency there might be
investment opportunities, somaybe you can buy a business,
maybe there's property thatyou're looking to buy and you
can't get it the traditional wayor.
or you need funds for a downpayment on a property or
something like that.
That's where home equity line ofcredit.
Again, because it's superflexible, you don't have to use
(11:02):
it for one thing or another.
You can use it for somethingfrivolous.
I don't necessarily recommendthat.
if it's not gonna be a goodthing for you overall
financially, but that's as looseas it is.
Don't do anything illegal.
I don't think they necessarilycheck stuff like that, but it's
super flexible.
You're able to use it forwhatever you can kind of dream
of and think of.
(11:22):
Paint off.
High interest debt is anotherexample too.
So if you do, if you foundyourself like, I got a hundred
thousand dollars in equity in myhome, but I have$20,000 in
credit cards at 22%.
I need to refinance my mortgageagain.
Going back to the beginning ofthis whole thing, do not
refinance your mortgage just toget a credit card into a smaller
(11:45):
interest rate.
If that means your mortgage isgonna have to jump up by a
significant.
Amount.
Instead, you can do a homeequity line of credit and move
that 22% credit card down to afive or 6% range, and that that
will give you a lot, lot lowerpayments, a lot less interest
that you're gonna be paying, anda little bit more flexibility,
(12:05):
paying that off as well from thecredit cards and.
Definitely will make your life alot easier.
So that's another good example.
If you have high interest debtsometimes I'll see private
student loans too that are like10, 12, 15%.
So that would be another thingthat typically carries a high
interest rate that you're ableto avoid altogether and get a
much lower, more manageableinterest rate and, and navigate
(12:26):
those things.
So that's all the, the greatfutures and benefits.
Again, I mentioned the downsidewith that interest rate being a
little bit variable.
Another thing I would say too isthat sometimes, sometimes I am
hesitant to recommend a homeequity line of credit if I'm
worried that my clients.
(12:47):
Are not actually going to manageit well.
So if I'm worried that they'rejust gonna tap into it and do a
lot of crazy stuff with nointentions of, of doing well
financially well, I, I might,might not make that a
recommendation for them.
Because you truly can, you canstart to supplement your
lifestyle and say, Hey, we gotthis thing that we can just tap
into as much as we want.
There's so much money there.
(13:08):
We can do this every singlemonth and just live a little bit
larger.
Do a little bit.
then what we actually can affordbecause you're able to edit
your.
For, for a short term situation,if there's some strategy behind
it and, and eventually you'regonna make more income or you're
eventually gonna weed this thingoff, that might make sense.
But you definitely don't want tocreate, use this to create a
(13:31):
lifestyle that you can't afford.
Cuz eventually the equity willrun out if the.
Real estate market doesn't keepgoing up in value as fast as it
had in the past.
You can definitely tap into allthat equity and all of a sudden
be like, oh, auto funds.
Now you're going on credit cardsto support that lifestyle.
So that's really a downside ifyou're worried about the
discipline aspect of notmanaging that well.
(13:55):
And it is just a common thingwhere you spend more, if you
have access to more, if you'renot kind of thinking long term
and thinking more strategicallyabout, well, this is a tool to
help you, not necessarily atool, just to live a, a crazy
lifestyle.
Because again, this won'tsupport that Indefinitely by any
means.
So thanks for joining me today,talking about home equity line
(14:17):
of credits.
Definitely good to.
Record a quick one because thishas been on my mind for a while
and I, I've been meaning towrite a blog post or, or do a
video or podcast on it, so I'm,I'm gonna do all of the above
with this information.
Thanks for joining me today.,
sometimes I am hesitant to recommend a home
equity line of credit if I'mworried that my clients.
Are not actually going to manageit well.
So if I'm worried that they'rejust gonna tap into it and do a
lot of crazy stuff
(00:35):
dIT DIT, DIT DIT disclaimer,alert.
This information is foreducations.
Don't just go use it firstconsult with your financial
advisor because that's way morelegit.
That's it.
That was Orlando Gomez and youcan catch him in season three,
episode four on how he brokeinto tech by writing a jingle.
(00:55):
Hello, thank you for joining Techie Personal
Finance Bootcamp.
Thanks for joining me today.
I'm gonna be talking about HomeEquity Alliance and credits also
called HELOCs.
And they're awesome.
They're super flexible.
They're gonna be super relevantto everything going on today,
right now with financial stuff,with life stuff, with work
stuff.
So I'm gonna be diving into allthat, the primary reason.
(01:19):
kind of this has been sitting inmy mind for quite a while, is
because I'm constantly hearingnews ads on this radio station I
listen to where they're tryingto talk people into doing a cash
out refinance for their homemortgage, even if the new
interest rate now is higher thanthat of what they had before.
So it's kind of crazy.
They're trying to talk peopleinto getting a.
(01:43):
Mortgage at a higher interestrate and giving up the old
super, super low interest rate.
And they're saying you should dothat because of credit card debt
to go on vacations, they're,it's definitely bad advice.
But obviously it'sadvertisement.
They're trying to make morebusiness for themselves.
They don't necessarily careabout that.
The end person being hurt bymaking such a, a poor financial
(02:03):
decision.
So if you.
There was a reason to tap intofunds.
A home equity line of credit isgonna be a good option where
you're able to do those thingswithout refinancing the whole
loan at a new higher interestrate.
So that's one thing.
Another secondarily reason thatthis has been kind of top of
mind is the fairs of recessions,the stock market and, and
(02:26):
everything that's going crazyright now.
So one of the things you can dobest, there's a lot of things
you can't do that are out ofyour control with regards to the
recession, but one thing you cando is.
build up emergency savings ifyou don't have an emergency
savings built up.
Well that's something where ahome equity line of credit might
be super helpful.
And so let's get into the justkind of nuts and bolts.
(02:46):
What is a home equity line ofcredit?
How does it work?
So first off, you have to have ahome in order to, to have a home
equity line of credit.
And the reason for that isbecause you're gonna be using
the equity that you have builtup in your home to be able to,
to use and leverage in case ofemergency, in case there's
different opportunities thatcome up.
and for example, if, if someonewere to have purchased a house
(03:08):
three years ago for 400,000, butnow it's worth 500,000, Well,
they have a hundred thousand inequity just from the growth.
But they also may have made adown payment.
They also may have made likematerial updates to their home
and increase the value that way.
So there's additional ways youcan increase your equity besides
the equity just going upnaturally on its own.
And so that's a huge resourcethat typically it's, it's stuck
(03:32):
there.
You can't, can't use it unlessyou follow that bad advice of
the commercials and, and cash.
The take some cash out of yourhome and do a refinance, but as
I kind of highlighted, thatwould be a horrible mistake
right now, just cuz interestrates are about 3% higher, most
likely than the mortgage thatyou have originally.
And you don't wanna do that forlarge balances.
(03:54):
If you have$300,000 on yourmortgage you don't wanna go from
a 2.75%.
To a 6% mortgage all becausethey're saying that you should
take the money and go onvacation and unlock yourself in
at a higher rate.
Definitely don't do that.
So, The reason why I love homeequity lines of credits, and you
might have heard of anotheralternative just called out home
(04:16):
equity loan, a little bitdifferent.
And here's the biggestdifference I'll mention right
now.
So the thing I love about thehome equity line of credit is
you actually don't have to takeout money if you don't need to.
What a home equity line creditdoes, it's kind of like a.
Between mortgage and your creditcard.
So the cool thing about yourcredit card is you can have it
(04:37):
just in case emergency.
You can have it just in casethere's an opportunity that
comes up and you don't need topay any interest on it if you
don't borrow funds.
The home equity line of creditis the same way if you don't
need the funds.
Well then you don't need to payinterest on anything.
It just sits here as a reserve.
You'll get pre-qualified forwhatever that line of credit
number is.
So maybe you get a, a$50,000home equity line of credit.
(05:00):
You're not paying interest onthat unless you start borrowing
it.
And then you can do it indifferent waves.
You can.
Borrow a big chunk of it.
You can borrow a smaller chunkand you can pay it down, make
payments, and if you makepayments, then that means
there's more for you to borrowagain in the future in case you
need access to it again.
So that's how it works, like acredit card.
And it's definitely differentthan a mortgage.
With your mortgage.
(05:20):
You pay down your mortgagepayments, you don't get access
to the equity as that's goingalong unless you have something
like a home equity line ofcredit set up.
So super flexible.
You have it just in.
Don't need to use it.
And there's basically no feesmost of the time.
It, it does depend on thelenders.
Some lenders will definitelycharge you for a closing car,
(05:41):
titling if there's an appraisaland things like that.
But what I've been seeing for myclients that I've been looking
at different options like thisfor is, they're most of the
mortgage companies, the homelender, they're saying, you know
what, if you get a home equityline of credit with us, we're
gonna cover those costs.
And for the most part, I've seenthem come in as pretty close to
$0 basically to get those thingslined up.
(06:03):
So that's a nice, huge abilityto borrow against these funds if
you need it.
Super flexible and very low costif you don't need anything.
And, and if you do start toborrow another great benefit.
Well, the rate is gonna be a lotlower than what it would be on a
credit card.
Credit card.
Interest rates right now isabout 22, 20 3%.
So very painful if you actuallyborrow funds and are unable to
(06:25):
make that credit card payment infull.
Cuz you'll start accruing 22%interest for home equity line
credits.
I was looking right before thefed increased the rates, but
last week I was seeing as low as5.25.
Saw a lot of 6%, so 5.2.
or 6%, if you did need to borrowmoney outta your home equity and
and are unable to pay that backquickly, that's gonna be the
(06:47):
rate that you're gonna pay itat.
One potential downside is therate typically is gonna be a
variable rate.
So even if it said 5.25% and youopen up a home equity line of
credit, now if interest rateskeep rising, it's possible that
interest rate might go up by thetime you start using it.
One benefit in future thatyou'll wanna look.
(07:10):
when you take out a home equityline of credit is a lot of times
they'll allow you to block in arate after you actually borrow
funds.
So they won't let you lock in arate, right?
When you get the home equityline of credit.
But let's say for example, youborrow$10,000, they'll say, Hey,
if you wanna lock this in, thisis the rate.
You can do that.
And you can say, yep, let's lockthat 10,000 I borrowed at
(07:30):
whatever that rate is.
Then you don't have to worryabout interest rates moving on
your or.
Another interesting feature thattypically I don't recommend
people use unless it is truly acase of emergency, but a lot of
home equity line of creditsactually only required that you
pay the interest only.
So if you borrow 10,000, like inthat example, and the interest
(07:51):
rate is 3%, well that would beabout$300 eight.
You'd end up paying over thecourse of the year for that and.
if that's all you could affordor if that's all you wanted to
pay, you could just pay thatover the course of the year, not
pay the principal down so that10,000 would still be owed and
you can just kind of keepcarrying that forward.
What I've seen most often is youcan do that for typically 10
(08:12):
years, so it's called a 10 yeardrop period.
after that, then there's a 10year repayment paired, so they
do want you to start paying itback eventually, but they're
super flexible.
They'll allow you to just paythe bare minimum, just pay the
interest accruing and not paydown the principal balance, and
then you can go ahead and paythat down.
In that second set of 10 years,the following 10 years, it will
(08:33):
be the repayment period.
During that repayment period.
Typically, they're not gonnaallow you to borrow any more
funds out, so you'll definitelywanna plan accordingly if that's
something that you're interestedin and want to do kind of long
term.
for most of my clients becausethe interest rate is a little
bit higher, being in the fiveand 6% range versus 2.75% range
(08:53):
for a normal mortgage.
I don't necessarily recommendnot paying it down or not having
a game plan for paying it down.
So that's something that's, youcan kind of decide where your
goals are in, in situations, butthat's where it's super helpful.
In case of emergency,Recession's, something that
you're worried about.
You lose your job.
You didn't quite build up theemergency savings or where you
(09:15):
wanted it to be.
I have a lot of bootcamp clientsthat just finished a bootcamp,
took a couple months to landtheir first position, kind of
burnt down through their savingsa little bit.
in something like a home equityline of credit.
If they had something like thatestablished ahead of time, they
could borrow against the homeequity line of credit, have a
very small required payment, anduse a home equity to kind of
(09:36):
carry them through those toughmonths.
while they're trying to build uptheir.
savings accounts or if they arelaid off in a time like that,
there's no urgency to have topay it back quickly and they
have a nice buffer to supplementany emergency savings they were
able to build.
So that's another situationwhere it might be super helpful.
Other reasons why people mightuse something like a home equity
(09:57):
line of credit.
So emergency savings mentionedthat.
Business venture businessopportunity.
This is a real life example.
That was something that me andmy wife were gonna implement.
If you've ever heard by a storyof how level up financial
planning came to be, I gave mywork two months notice.
At the same time we were goingthrough the home equity line of
credit application process.
(10:19):
I think we were a week out fromclosing, and so I gave.
Worked two months notice.
Ended up being about two tothree days later.
I was no longer working there.
And once that happened, I nolonger had the income to support
getting a home equity line ofcredit.
So the game plan was to havethat in place.
And, and I thought the twomonths it was gonna be good kind
of runway buds since it ended upbeing two days.
(10:40):
That didn't work out, but I wasgonna use it for a business
venture, kind of just in caseemergency there might be
investment opportunities, somaybe you can buy a business,
maybe there's property thatyou're looking to buy and you
can't get it the traditional wayor.
or you need funds for a downpayment on a property or
something like that.
That's where home equity line ofcredit.
Again, because it's superflexible, you don't have to use
(11:02):
it for one thing or another.
You can use it for somethingfrivolous.
I don't necessarily recommendthat.
if it's not gonna be a goodthing for you overall
financially, but that's as looseas it is.
Don't do anything illegal.
I don't think they necessarilycheck stuff like that, but it's
super flexible.
You're able to use it forwhatever you can kind of dream
of and think of.
(11:22):
Paint off.
High interest debt is anotherexample too.
So if you do, if you foundyourself like, I got a hundred
thousand dollars in equity in myhome, but I have$20,000 in
credit cards at 22%.
I need to refinance my mortgageagain.
Going back to the beginning ofthis whole thing, do not
refinance your mortgage just toget a credit card into a smaller
(11:45):
interest rate.
If that means your mortgage isgonna have to jump up by a
significant.
Amount.
Instead, you can do a homeequity line of credit and move
that 22% credit card down to afive or 6% range, and that that
will give you a lot, lot lowerpayments, a lot less interest
that you're gonna be paying, anda little bit more flexibility,
(12:05):
paying that off as well from thecredit cards and.
Definitely will make your life alot easier.
So that's another good example.
If you have high interest debtsometimes I'll see private
student loans too that are like10, 12, 15%.
So that would be another thingthat typically carries a high
interest rate that you're ableto avoid altogether and get a
much lower, more manageableinterest rate and, and navigate
(12:26):
those things.
So that's all the, the greatfutures and benefits.
Again, I mentioned the downsidewith that interest rate being a
little bit variable.
Another thing I would say too isthat sometimes, sometimes I am
hesitant to recommend a homeequity line of credit if I'm
worried that my clients.
(12:47):
Are not actually going to manageit well.
So if I'm worried that they'rejust gonna tap into it and do a
lot of crazy stuff with nointentions of, of doing well
financially well, I, I might,might not make that a
recommendation for them.
Because you truly can, you canstart to supplement your
lifestyle and say, Hey, we gotthis thing that we can just tap
into as much as we want.
There's so much money there.
(13:08):
We can do this every singlemonth and just live a little bit
larger.
Do a little bit.
then what we actually can affordbecause you're able to edit
your.
For, for a short term situation,if there's some strategy behind
it and, and eventually you'regonna make more income or you're
eventually gonna weed this thingoff, that might make sense.
But you definitely don't want tocreate, use this to create a
(13:31):
lifestyle that you can't afford.
Cuz eventually the equity willrun out if the.
Real estate market doesn't keepgoing up in value as fast as it
had in the past.
You can definitely tap into allthat equity and all of a sudden
be like, oh, auto funds.
Now you're going on credit cardsto support that lifestyle.
So that's really a downside ifyou're worried about the
discipline aspect of notmanaging that well.
(13:55):
And it is just a common thingwhere you spend more, if you
have access to more, if you'renot kind of thinking long term
and thinking more strategicallyabout, well, this is a tool to
help you, not necessarily atool, just to live a, a crazy
lifestyle.
Because again, this won'tsupport that Indefinitely by any
means.
So thanks for joining me today,talking about home equity line
(14:17):
of credits.
Definitely good to.
Record a quick one because thishas been on my mind for a while
and I, I've been meaning towrite a blog post or, or do a
video or podcast on it, so I'm,I'm gonna do all of the above
with this information.
Thanks for joining me today.,
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