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Advantage Home Equity

Using Home Equity to Your Advantage

What rate of return is the bank paying you for the equity in your home? Zip Zero Zilch! Use the equity to pay off high interest credit cards ...

This chart shows the haves and have-nots of the housing market, and it's getting worse

More than a decade after the housing crisis, homeowners have been made whole — and then some. But the amount of mortgage debt that Americans owe still hasn’t returned to its previous, precrisis high. Those two numbers together say a lot — not all of it happy — about the state of our national housing market.

(The numbers in the chart above are from the Federal Reserve’s massive “Flow of Funds” report, more on which is available here .)

There are lots of reasons why home equity is up. Home prices have spent the past several years roaring higher , even if that pace of growth has recently started to moderate.

Home equity is also more concentrated. Americans are staying in their homes longer, in large part because the housing market has made it so challenging to move around. That means that they're paying down more of their principal, if they have a mortgage.

Home-equity loans: your house is not an ATM

Many planners point to the foreclosure crisis that started a decade ago as an example of what can go wrong when people binge on home equity debt.

“Having equity in your home is a huge financial advantage that can provide for significant flexibility, security and peace of mind,” says Howard Pressman, a certified financial planner in Vienna, Virginia. “It is not an ATM that can be used to supplement your lifestyle.”

You may need that money later

Retirement experts predict many Americans will need to use home equity to support them when they stop working. They may do that by selling their homes and downsizing or by using a  reverse mortgage , which doesn’t require payments. Reverse mortgages give people 62 and older access to their equity through lump sums, lines of credit or a series of monthly checks, and the borrowed money doesn’t have to be paid back until the owner sells, dies or moves out.

See: America is house-rich but cash-poor — and these businesses see opportunity

Any advantage between joint and single home equity lines?

Me and my wife are thinking about it, but not sure if to go with joint or single? What are pros and cons?

TAGS: Mortgages, Home Loan, Bank, Banking, Finance.

It's an equity line. It HAS to be titled at least in the same manner as the house. If the house is a joint ownership then so WILL the loan. They will demand all owners pledge to the loan.