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Should I take out a home equity line of credit for reasons other than home improvement? I read that in order for the interest to be tax deductible, the line of credit has to be under $100,000. Does this mean, the total amount of debt that we wind up borrowing has to be under $100,000 or that the entire line of credit (even if we don't use the entire amount available) has to be under $100k?
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Jan 30, 2017 23:28
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| # ? Apr 25, 2024 05:23 |
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SnatchRabbit posted:Should I take out a home equity line of credit for reasons other than home improvement? I read that in order for the interest to be tax deductible, the line of credit has to be under $100,000. Does this mean, the total amount of debt that we wind up borrowing has to be under $100,000 or that the entire line of credit (even if we don't use the entire amount available) has to be under $100k? The amount you borrow, which is the amount you can deduct, has to be under $100k. They dont care what your total line is, you can only deduct $100k on your taxes. And don't do anything stupid with it, but if you can get a good rate its generally one of the cheapest ways to borrow money if you have equity in a house. Make sure to read the terms very carefully, there are a lot of very different products on offer out there. For example, I have a 5yr interest only HELOC on my house because I only use it for short term things. It has a bubble payment at the end of the 5yr- sure I could likely just refinance it but it would be a great way to get caught with your pants down if there was another loan crisis. greasyhands fucked around with this message at 03:07 on Jan 31, 2017 |
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Jan 31, 2017 02:37
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As a word of caution, I would not use home equity for anything other than further investing. In my case, I used a Home Equity loan for the down payment on a rental home. There are plenty of people and advertisers out there that talk about using home equity to consolidate loans, pay off debt or buy big ticket items. While this is all well and good, remember that you're putting up your house as collateral and if anything goes wrong with paying the HELOC back your home is in jeopardy. Leading up to the home mortgage crisis a lot of people saw the value of their house increase tremendously, took out Home Equity loans to buy dumb stuff and ended up in a whole world of trouble (if not completely losing their home) when they suddenly couldn't afford the payments. It's unlikely that we'll see such a collapse again anytime soon but just be very, very careful on how you spend that money. Using your home equity like a savings account is not as safe as some would make it out to be.
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Feb 11, 2017 14:50
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