Borrowers May Rely Too Heavily on Home Prices Rising

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Will I be able to pay off my equity loan when I sell my home down the road?

Borrowers May Rely Too Heavily on Home Prices Rising

A lot of borrowers count on their house increasing in value. Who wouldn't? Real estate and homebuying have been great investments for Americans for generations.
Borrowers often count on paying off a second mortgage when they sell their home. So they don't worry about the huge lump sum they borrow to finance big-ticket purchases and vacations.

But what if real estate values fall? What if your house value does not rise as expected? Then you will owe more on the house than it is worth. You still have to settle your debts but out of your own pocket.

You can face serious financial problems, or you may have to stay in a house you do not want or no longer need. Use your home equity loan for home improvements that will increase your home's value. Don't spend borrowed money on purchases you can live without.

   

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