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Home Equity Can Save You from Financial Crisis |
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Written by Cornie Herring
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Tuesday, 12 December 2006 |
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Word Count: 486 Equity is simply the value of a property after all debts have been deducted.
If your home appraises at $300,000 with a home loan of $150,000, you have
$150,000 in equity. Whether you realize it or not, this equity can get you
through hard times or provide you with a funding resource. Let's look at some
examples.
Medical Emergency
If you get though your life without any financial emergencies, you are
considered a lucky person on the earth. Unfortunately this luck does not follow
most of the people on earth. We can't foresee any emergencies which may happen
in the future. If you don't build your wealth at the current time which you can
control and plan, you be dragged into a deep debt problem and face a serious
finance crisis if any unforeseen emergency pop up which suddenly need a huge
amount of money to resolve the problem.
Example of common emergency is serious medical treatment in major illnesses and
serious accidents are required huge amount on medical bills. If you ever run
into this situation, you will be extremely thankful if you have purchased a
home. With a home equity, you can get a home equity loan easily or get a home
equity credit line to cash out the needed money.
Loss of Income
Sudden loss of income may lead your to trap into debt. Your credit card debts
and other high interest rate debts will start to accumulate if you miss your
monthly payment due to loss of income. If your have ever build your wealth with
home equity, now it will become your financial crisis saver to minimize the
negative impact. With your home equity, you could easily do a debt consolidation
with home equity loan. Home equity loan is carries much lower interest rate and
have a flexible repayment term for you to choose from. By consolidate your debts
into one home equity loan. You monthly repayment will be much lower as compare
to your other high interest rate debts. Thus, it reduces your financial burden
and buys you some time while you are sourcing for new income.
Education
College tuition is not cheap these days and the education expenses on your
children may be very costly and can be a nightmare for parents. Home equity can
put an end to college tuition nightmares. You can borrow the money against your
home equity to pay for your children's college expenses.
Summary
Home equity is built over time. As equity builds, you create a pool of money to
access in trying times. Growing equity is a great way to pursue wealth building
and it can provide a financial cushion when life gets hard.
Cornie Herring is the Author from "StudyKiosk-Credit Basics"-
http://www.studykiosk.com/creditbasics . "StudyKiosk-Credit Basics" is an
informational website on credit basics, debt consolidation and bankruptcy.
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