Take my money, please!

The headline in the Wall Street Journal reads “Lenders Push Home-Equity Deals. With Rates at 5-year High, Banks Seek to Keep Consumers Borrowing.”

Rates have been going up dramatically. HSH Associates in Nj reports average rate for lines of credit at 8.33%, almost double rate of two years ago. Home Equity Loans are running at 7.96% average, up from 6.75%.

Some of the tricks being used by banks to entice you to borrow their money at the new higher rates:

–Lower rates for customers who buy other services
–$25 gift card and two free airlines flights with every loan
–Fixed rate loans on some or all of the balance
–Rates that go down the longer you take to pay off

Home Equity loans can be a good thing, but they can also vause you to lose your house. We urge you not to use that kind of financing for anything but important, “investment-like” purchases, like home repairs, education or a car.

Never take out a Home Equity Loan to buy groceries (if you are retired and need living money, think about a reverse mortgae instead), and be very careful of blowing the cash on a vacation.

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