Hello, anybody out there? I mean besides my mom, who probably reads this just so she can correct my mistakes (she's worried I'm becoming smarter than her)!
Blogging, yes I said blogging, is a two-way street. I post and you comment, so lets get the ball rolling... I guess I should pose some questions. Lets talk about home equity.
According to the website Zillow.com, I've gained about $20,000 in value since I bought April 2005. Now weather or not Zillow is an accurate estimate is debatable, but I thoroughly reported that very site and wrote a story about it. What I found is that Zillow can be somewhat accurate depending on the area. It works pretty good for metropolitan areas, which of course, Minneapolis is. Now that "zestimate" doesn't account for improvements or other things that will increase or decrease the value of my home, such as the new perennials I just planted or the non-conforming bedroom that was added to the basement. But, the value they come up with is based on comparable sales, tax data and other data from city and county records.
So what if my home really has increased in value by $20k? Should I refinance and take out a home equity line of credit? I could use the money to pay off some credit card debt, my car and replace the old furnace in my basement. That sounds wonderful! But I'm sure there are people who'd advise against it for whatever reason.
What do you think?
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4 comments:
I have no clue what you're talking about.
I don't know, its pretty subjective. There are a lot of good uses you can do with the extra cash, but will you benefit from it in the long run? What's the going rate on a HELOC, is it lower than the interest rate on your credit card? How much will save by putting in a new high effiency furnace, will you realize the benefits of those savings before you sell the house? In my opinion, you could probably get more favorable terms through the heating company on a new furnace and unless you have a substantial amount of credit card debt among numerous cards, what's the point. Now if you were to take that money and blow on it a crazy weekend in Vegas, to me, that makes sense. But if your moral person who doesn't like to gamble, keep the money in the house.
I don't think it is a good idea to take home equity and pay off credit card and auto debt. Sounds nice, one payment, less worry, etc. But pretty soon the credit card start to go up again and you are probably going to need a new car before this one is paid off (in the line of credit). Thus, you have a heftier house payment and another auto loan and more credit card debt.
My motherly advice is to plug along with the card and car payments, keep your equity. It will be invaluable when you are ready to upgrade to a bigger home (one with guest accommodations!!) As far as the furnace goes, that's a tough one. How were your fuel bills this winter, did you stay warm? If it seems to be working okay, I'd probably wait for a really good deal on furnaces (with rebates!) from the gas company.
Just my motherly advice, and sent with all my love.
Well, I took out a home equity loan every time we built up some equity. Having 3 young boys and trying to keep up a house was a struggle, and the kids were in a Catholic school so there was tuition, and we had school loans and credit card debt, so I took money whenever I could! Then again, I always did live for the moment, and didn't worry much about what would happen in the future.....
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