JCKC Realty

Real estate office located in Sturbridge, Massachusetts. Articles and blog posts located on the Internet.

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Selling Your House — “For Sale by Owner” — is it Right for You?

So you’ve decided to sell your house. There are many things to do now, and one of them is to decide if you are going to use a real estate agent or go the “For Sale By Owner” route to sell your house.

Naturally, the most attractive thing about selling your house without an agent or broker is that you save the commission you would normally pay to the agent. This amount can vary, but often runs around 6% of the price at which you sell your house. With a $100,000 house, that’s $6,000! In your area of the country the average real estate agent commission may be slightly above or below this amount. Also, depending on the market, you may find an agent who is willing to negotiate a lower commission to sell your house.


What Does The Real Estate Agent Do To Sell Your House That You Can’t Do With “For Sale By Owner”?


So what does he do for his commission? Plenty. In addition to trying to sell your house to potential buyers, he also advertises it to other agents. This one fact alone is what usually makes the sale. He lists it in the Multiple Listing Service, and often spends time and money specifically to market your home to other agents.


What’s The Multiple Listing Service? How Can It Help To Sell Your House?


Most agents belong to the Multiple Listing Service, and they find houses for their buyers through this service. Your agent will list your house in this database, along with a detailed description. Here’s a common scenario of how the Multiple Listing Service works to sell your house:


A prospective buyer calls an agent on a house he may have advertised in the paper. The agent sits down with the person looking to buy, and asks him what all he is looking for in a house. They discuss price range, what they want in a house, what area of town they want to live in, etc. Then the agent consults the Multiple Listing Service to find houses which fit the home-seeker’s interests. The original house which the prospect called on may or may not be the one he buys. In fact, according to RealEstateABC.com only about 10% of “For Sale By Owner” homes sell successfully, and this is one reason why.


What does this mean to you?


When an agent lists your house in the Multiple Listing Service, all the agents in your city are now trying to sell your house. If you decide to sell it “For Sale By Owner”, you may not be able to list it in the Multiple Listing Service.


So, when selling your house “For Sale By Owner”, you need to be able to find prospects to buy it on your own. Every agent in the city will not be helping you to sell it. And you need to be able to catch one of those small percentage of people who buy the same house they called on from an ad.


Where can you find prospects when your house is “For Sale By Owner”?


Lots of places…


Your Job — Many people find a new house through someone they know at their work. Also, if you work for a company with multiple locations, they may be moving new employees into your area who are looking to buy a house. Depending on what business you are in, you may also have business customers who may be interested in buying a house.


Your Family — Perhaps a family member would like your house. Let them all know you are selling it.


Your Friends — Let them all know. Even if they don’t want your house, they may have friends or relatives who are looking for a house just like yours.


Newspapers — Advertise in every paper for your area, even the small community papers.


Websites — There are now “For Sale By Owner” websites all over the Net. Do a search for some with listings in your area, and list your home. The most popular “For Sale By Owner” website is ForSaleByOwner.com. They offer many benefits to help you sell your house, along with listing it for you!


Your Neighborhood — Print up flyers and distribute them to all of your neighbors. They may be looking to switch houses, or have friends or relatives who may be interested.


“For Sale By Owner” — Some Other Things To Consider


Lower Offers When Your House Is “For Sale By Owner”


When you want to sell your house the “For Sale By Owner” way, you may have many people simply cut off the typical agent commission in their offer to buy. They know that you do not have to pay an agent, so they lower their offer. If you accept an offer such as this, then all your hard work and effort does not save you anything at all! So sharpen your negotiating skills to sell your house at the best price!


“For Sale By Owner” — Extra Legal Costs


“For Sale By Owner” also means that you will probably need to hire a real estate attorney. You’ll need to consult with him about your legal responsibilities, and to provide the proper paperwork. If you are using an agent, he can usually guide you through the proper steps without additional charges. So to whatever you save in agent commission, you need to remember to add back in these attorney fees to see your real savings.


“For Sale By Owner” May Take Longer


Since you are the only one promoting, it may take longer to sell your house because there are less people looking at it.


So is “For Sale By Owner” right for you? In making your decision, be sure to take the above circumstances into account. Do you have the time to sell your house? Do you have up-front money for advertising and for an attorney? Do you have the negotiating skills to make a successful sale? If you answered, “Yes” to these questions, then “For Sale By Owner” may get you an extra few thousand dollars when you sell your house!

Real Estate: Tenants and Property Owners, a Few Things You Need to Know

Some people buy real estate for purposes of making money such as renting it out to generate a good monthly income. Believe it or not thousands of people do this every year and make quite a bit on their investment. This is especially true about unattractive properties that need a little work. With a few weeks of cleaning and repair you can take a cheap property and turn it into a cash cow getting well $1,000 a month with it depending on size.

But with this type of real estate investment that requires a tenant to live in the property you do run a certain amount of risk. Even if you have a property management company which does make it easier, there can still be a couple of problems if your rent to the wrong ones. This article can show you current laws for property owners with this intent and even a few tips and pointers to tenants that can help to stop problems before they get out of hand. Think of it as common ground for both the renter and the landlord.


Real Estate: New California Laws


California laws may be different than other states but you will find in some cases it is the same. The best way to find out current laws in your state if you are looking into buying a property to rent out is to call a state office and they can direct your call or send you the information on this request.


There are two major laws that directly impact a property owner after 2006. These laws are very important and many don’t even know they exist.


Property taxes in cases with ‘Domestic Partners’, according to Senate Bill 565 registered domestic partners will be treated the same as spouses under California property tax laws. This is definitely something to think about.


In January 1, 2006, property owners can give a 30 day notice to vacate the premises to any of their month-to-month tenants, unless of course there are subsidized housing rules that apply. This, for some is a problem as the existing law that requires a full 60 days of notice before expecting a tenant to vacate no longer applies… there are, to my understanding, a few circumstances that would still be entitled to the 60 day notice but don’t count on it.


Real Estate: Tips for Tenants


If you are a tenant there are few things you should know that can help you avoid certain problems that can seriously damage your credit and leave you with a big fat eviction. If you follow these tips you can stay on top of your situation and remain the responsible party of anything should threaten your position.


First of all you should always read thoroughly your rental agreement before signing. If it states something about pets, guests or even something as simple as working from your home you should pay close attention to that before agreeing. This could land in trouble down the line.


Next, you should always correspond by e-mail or standard mail and have copies saved of everything that is written between you two. In case something were to happen regarding repairs or anything else for that matter you should be able to provide proof that you have tried to resolve the issues in a responsible manner. So, get EVERYTHING in writing.


Know your rights! There are so many rights that you, the tenant, have that should never be impeded upon. You have a right to privacy, a right to live in a secure environment, the right to have problems fixed at the property owner’s expense, and so much more.


Real Estate: Closing


It can be a difficult task to own a property but it can also be unsettling to be a tenant in the wrong circumstance. If you are in the right then the facts will prove such. This is why, for both parties, all things should be in writing and communication should always be open. Agreements in writing are usually the deciding factor in any real estate case, make the documents involved speak volumes about your credibility and responsibility.

How to Avoid Buyer’s Remorse in Real Estate


We have all experienced buyer’s remorse at one time or another. Whether it was over that slinky red dress that looked so good in the store or that high-priced tennis racket you were absolutely sure you would use every day. Now both are sitting in your closet, and you are finally in the acceptance stage of buyer’s remorse. But buyer’s remorse in real estate can have a far greater impact on you than buyer’s remorse following any other purchase, even an expensive motor vehicle. After all, buying a home is the largest purchase you will likely ever make. Here are some tips on how to avoid buyer’s remorse in real estate.

Firstly, it would serve you well to keep in mind that there is such a thing as non-buyer’s remorse in real estate. Non-buyer’s remorse could result from over-shopping, from not making an offer on a piece of real estate that you truly want yet hesitate to buy for fear of buyer’s remorse. So, do not think that shopping around forever and ever will necessarily help you avoid remorse. You may still suffer it, just in a different form.


The best way to avoid buyer’s remorse in real estate is to become a confident home-buyer. And the best way to become a confident home-buyer is to do research, to know the real estate market enough to feel comfortable making important decisions. It also means studying your potential new home from all angles, including its distance from work, the type of school district it is located in, its proximity to shopping and other things that may be important to you.


You should also get pre-approved for a mortgage. Allow a professional lender to crunch the numbers for you before you shop for your new home, so that you know what you can afford. This is vital, especially for first-time home buyers who often bite off more than they can chew. Obtaining pre-approval for a mortgage will help you stay within your price range and thus, help you to avoid buyer’s remorse.


Ask the opinions of others. Get advice from friends, relatives, colleagues, or whoever else you trust before purchasing your new home. This will help to build confidence in your decision-making abilities and more importantly, it will help to eliminate the risk of buyer’s remorse.


Once you have finalized the purchase, make the home your own. Your new home may seem foreign at first, and that could lead to buyer’s remorse. Give your new home life and design the interior and exterior the way you would like. Paint, carpet, landscape. Whatever it takes to make you feel more at home.


If you still feel buyer’s remorse creeping in, keep in mind all the thought you put into this decision prior to making the purchase. You did your research, you got pre-approved for a mortgage, and you asked the advice of friends, relatives, and colleagues. Do not beat yourself up over it. Buyer’s remorse is common among home-buyers. Sometimes it simply cannot be helped.

Real Estate: Shopping for Property on the Internet


We buy books and videos, shop for clothing and computers, even cars on the Internet, so what is so different about buying property? A lot! This does not mean you should not shop for land, a building, or some combination of the two with the aid of the Internet, but that you should be prepared to go about it in somewhat of a different manner than you do other goods and services.

When we shop for goods or services, it is more than likely than not that if we are unsatisfied with the purchase that we can return an item or disagree with the way a service was provided, resulting in a refund or credit. Property is not returnable. Once you buy it, you own it. In addition, what you see in person is what you get, but what you see in a photo may be quite different, and that is often times where the problem lies. Seeing property via a group of pictures is not always representative of what you will see if you were to stand on that same piece of land.


Consider the Internet a Tool


Therefore, what should you do if you are interested in buying property, be it a house, acreage, building, or some combination in this manner with the aid of the Internet? Foremost, consider the Internet just one tool of many that you will use in helping you make your buying decision. Buying a property sight unseen save for a few exchanged photographs via email can occur, but I would not recommend it.


Tips to Increase your Shopping Satisfaction


The following tips will help you get the most out of shopping for property with the aid of the Internet.


Once you have found a property you are interested in, request a written description of the property. If the description is not clear, ask for clarification.


Never assume something is or is not included with the sale.


Check it out in person if possible. If not, contact someone that can. Most real estate offices are willing to take on such an undertaking for a fee. Just because a seller is not interested in listing with a realtor does not mean that a buyer must also forgo one. You might run into the occasional seller that wants no dealing with a realtor whatsoever, but most will be more than happy to accommodate a third party there to rep[resent you if it means a possible sale.


Ask if there are issues that the seller feels should be disclosed. You might think a seller would not tell you negatives, but some will, wanting a clean sale to a happy buyer.


Never assume an answer to any question you might have. Inquire about all applicable questions. For example, is there electricity run to a rural property, is there a well or city water, is the property in a flood zone, is there legal access to the land, what is the property and the surrounding area zoned, are there any restrictions in regards to the property or any buildings on it, is the title clear, etc.


Using the Internet as a tool when shopping for property can be invaluable. It can allow you to narrow your search before starting the legwork.

Ten Myths of Real Estate Investing


Even with all of the books and other materials on the market today that detail exactly how one goes about investing in real estate, there is still a great deal of mystique around the whole business. Mystique breeds fear. When people don’t understand a thing, whether that thing is a society from halfway around a planet, a species that doesn’t really resemble people or dogs or other animals they are accustomed to, or buying real estate, they become afraid. Sometimes they want to destroy a thing that frightens them. Sometimes they simply want to avoid it. Nine times out of 10, though, they will make up something about it. That’s why there are so many myths about real estate investing. Even intelligent, educated people believe these myths without so much as a second thought.

Let’s look at a few of those myths surrounding investment property, see if you have any swimming around in your head, and fish them out, shall we?


Myth No. 1: Only the disgustingly rich can get into real estate investing. Very popular assumption, but not true. In fact, a lot of disgustingly rich people got that way by investing in real estate. Rich Dad, Poor Dad guy Robert Kiyosaki said he was dirt poor when he started looking at investment property. There are things like bank loans and investors that can get you over the rough parts of buying real estate.


Myth No. 2: You have to be born into a family of real estate moguls to understand investing in real estate. Another falsehood. That’s like saying you have to be born into a family of brain surgeons to understand brain surgery. What you do have to do, in order to understand real estate investing, is study real estate. There are plenty of books and experts out there to help you along your way in buying real estate. Learn something about the business and then buy some investment property.


Myth No. 3: If you’re not extremely confident and smooth while buying real estate, people will see through you and you will fail. That may be true if you’re trying to manipulate them into believing something that isn’t true. But when investing in real estate, you are simply trying to look for a good deal. In real estate investing, you always have the power to walk away from a piece of investment property that doesn’t suit you. You can even stutter you way through the whole thing if you like.


Myth No. 4: In real estate investing, you have to know somebody to get your foot in the door. Not really. Of course, the more people you know, the more information about hot investment property will naturally come your way. It’s called networking. You can always meet people, just like you can always learn things.


Myth No. 5: You have to be a seasoned negotiator and a smooth operator to be successful investing in real estate. Seasoned negotiators are those who have been buying real estate for a long time. In order to have done something for 10 years, you have to first actually do something for 10 years. Which means that, for a while, you are a newbie at handling investment property. That is unavoidable. Everyone has to start somewhere. Practice real estate investing long enough and you will be a seasoned negotiator. You may even become a smooth operator.


Myth No. 6: You have to be a real estate investing expert. There is no way you are going to become an expert without first investing in real estate. You’ve heard of getting your feet wet? You have to just get in there and start buying real estate. It’s good to read a few books before starting, but there is no way you are going to be able to learn everything about investment property from books. Experience is the best teacher.


Myth No. 7: Investing in real estate is a big gamble. Sadly, people do approach real estate investing as though they were playing at the Roulette wheel in Vegas. These are the people who lose. When you start buying real estate, you need to learn as much as possible and plan your purchases to give yourself the best opportunity to succeed. Sure, some people will be better than others at finding great investment property. Those people will probably make more money. But they aren’t simply guessing. They are getting to know the markets and purchasing accordingly.


Myth No. 8: You can’t afford to make mistakes in real estate investing. Anyone who tells you that you can’t make a mistake isn’t being very realistic. It is human nature to make mistakes. It is inevitable. Try to minimize your mistakes when buying real estate, sure, but then use them to teach yourself how to approach investment property. Mistakes are your best teachers, and your most valuable assets.


Myth No. 9: One bad deal will sink you financially. If the deal is bad enough, sure. It could. But in learning how to approach investing in real estate, you should have learned not to sink everything you have into one deal when buying real estate. You should also learn that even a bad deal can make you some money. Aside from that, spend the money that you can actually afford to lose.


Myth No. 10: Real estate investing is just the latest get-rich-quick fad. If approached properly, investing in real estate isn’t a get-rich-quick anything. It is a methodical process of building your wealth. Ask Donald Trump.


Don’t let anyone feed you these myths. There is nothing mystical about investing in real estate. Buying real estate is simply a process, just like anything else. Investment property is big business, and it wouldn’t be if it were all a gamble.

Buying Real Estate Successfully in Phoenix, Arizona


If you want to purchase a home in the Phoenix area, a skillful Phoenix real estate agent can make your goal so much easier to achieve. A knowledgeable Phoenix realtor knows the steps to take to make sure that you are successful in buying Phoenix real estate.

The first thing to do is find a realtor who focuses solely on buying homes. With nothing else to distract him or her, your agent can focus on finding you the best home to meet your needs. You agent should consult with you to determine what you need and want in a home. Then your Phoenix realtor should help you with all of the different loan options that are available to you from your lender, and answer your questions. You will also expect your agent to position your offer for success, and thus he or she should assist in getting your loan pre-approved and obtaining a Loan Status Report, a required report for your Arizona Purchase Contract.


After your agent has determined what kind of house you would like and what the price range is, he or she can then begin to search for the perfect property. New properties are listed daily, and so you will want an agent who is on top of the search and daily checks the new listings, matching them to your desired criteria, in order to focus the search and find your dream home. Your real estate agent should also set up tours for you of prospective properties, and help save you time by previewing properties for you, reporting back to you often.


Finding a perfect home is only half the story. In order to live there, you need an experienced Phoenix realor who knows how to negotiate so that you can obtain the property. You need someone with a clear understanding of the Phoenix home market in the area where you want to buy, and can use this information to come up with a successful offer on the home. Your agent will then negotiate the offer with the seller. You want someone with your best interests in mind when it comes to this important stage in home buying, and an experienced agent you can trust is crucial.


Once your offer has been accepted, you want an agent who still stays in the game, because there is a lot that has to happen before closing. You want a realtor who will be there to make sure all of the inspections and repairs get done properly, and that the paperwork with the lender and the title company is proceeding smoothly, so that your interests are protected all the way through to closing and even beyond. A good realtor means successful home buying.

Domain Name Appraisals: How Valuable is Your Domain Name?


Fifteen years ago, your assets might have included your home, your beach house and even your office building, but not we’re talking about Internet real estate. Millions of people have registered domain names, many of which are growing in value every day. Just how valuable is your domain name? And how do you get a domain name appraisal?

Just because you have a valuable domain name doesn’t mean that you’ll be able to profit from it in the future. For one thing, we don’t know how the landscape of the Internet will change over the next decade or two, and for another, what’s valuable now might not be worth pennies in just six months. So don’t count on domain name purchases to make you rich, but guard your Internet real estate just in case. It might also be a good idea to get your domain name appraised every once in a while.


The first thing that is considered when appraising your domain name is the extension. A .com domain name is going to be decidedly more valuable than a domain name with a .net or .biz extension. Some people contend that .org and .net extensions are just as valuable as .com, but you’ll automatically make more money selling a .com name.


The next thing that helps determine the appraisal of your domain name is the commercial value of the name itself. For example, a domain name like StocksandBonds.com is going to be more commercially relevant than StockAdviceFromSteve.com. In the first example, the domain name is specific but can also be used by a wide variety of owners. In the second example, the domain wouldn’t make much sense unless someone named Steve was running and operating it.


The commercial aspect of your domain name appraisal should also involve the commercial appeal of the name. How many people are searching for the subject matter of your website each month? For instance, far more people search for information on weddings each day than on plumbing or Bermuda grass. Knowing this, a domain name having to do with weddings will be instantly more valuable than one about buying, selling or growing grass. It’s just common sense.


Another factor in domain name appraisals is the length of the domain name. It is much easier to remember a website with the URL Cars.com than it is to remember CarsAndTrucksAndVans.com. However, length should not be sacrificed for logic, as a domain name that doesn’t make sense isn’t worth it. You might be able to get rjfk.com fairly easily, but it won’t be valuable because the name doesn’t make sense. The same goes for domains with numbers; they are significantly less valuable than domains without numbers.


Hyphenation is another factor that you should consider when determining the value of your domain name. GreatBuys.com is going to fetch far more money than Great-Buys.com, simply because most people can’t remember the hyphen and will wind up at a competitor’s site.


Knowing this, then, how do you find out how valuable your domain name really is? One way is to put it up for auction and see how high the bids actually get. This is dangerous, however, because if you decide to auction your domain name, you’ll usually be bound to selling it to the highest bidder, even if no one wants to pay more than $20. Another way is to use one of the numerous domain name appraisal sites on the Internet. Here are a few examples:







You can usually get an estimated domain name appraisal for free, but if you want a scientific value, you’ll need to pay anywhere from $20 to $200. You might be surprised how much your domain is offered, however, which is definitely a plus. AssociatedContent.com, for example, is estimated to be valued at more than $833,000 by LeapFish.com.

Could You Have a House Loan Modification After Bankruptcy?


The newest real estate foreclosure trend was the reason why millions of American home owners scrambled for extra inexpensive terms for mortgage loans . Whether it is an increasing adjustable rate, failure of equity, diminished earnings, or simply a bad method to lend cash, people will need revising of loans. Sad to say , that there are only few people who capable to accomplish the loans using the usual method of refinancing the mortgage loan .


House loan modification occurs the mortgage company consents to switch the terms in agreement with demand of the debtor . Most of loan modifications come about once the borrower desires a decrease in payment and the minimization and loss division from the lender accept to the conditions . Loans modification turned out to be an important tool employed to avoid foreclosures .


Bankruptcy is an essential lawful action filed every time a customer will not be capable of give his/her monthly amortization. All civil procedures contrary to the defaulter while in insolvency is formally stopped by declaring bankruptcy . As stated from the Bankruptcy Law, lenders should suspend any law suit from the consumer which entails foreclosures. But the lender has still the alternative of filing exemption from instinctive stay. When the request is awarded the mortgage lender is approved to continue using the property foreclosures act.


Bankruptcy does not continuously delay or stop foreclosure. It does not essentially permit the homeowner to stay in possession of the house until they pay the debts payable for the lender. However, in most of cases, bankruptcy will deter the foreclosure.


Delinquency with your home loan can not be prevented particularly you suffer economic crisis in your life. The foreclosure break out has formed a notable power for homeowners considering that lending institutions do not desire for more houses. Liquidity started to be a serious matter with bank facilities; thus they are giving and settling for house loan modifications with lesser costs for homeowners. When you have filed bankruptcy, the lending bank will help you get the home loan modification and will also be given lower monthly obligations .


Do not get in despair after bankruptcy because home loan continue to be probable. Just try to find the best possible bank or any home loan company that can assist you that line of hope. Mortgage modification after bankruptcy is actually possible because there are plenty of finance companies that can help you with your problem .

Writing a Business Plan Free to Develop Real Estate Investing Success


Writing a business plan free is the first step in developing a successful real estate investing business. A variety of business plan tools are available at no cost via the Internet. Some focus specifically on the real estate industry while other programs provide templates that can be customized to suit the requirements of your business.

Writing a business plan free allows real estate investors the opportunity to establish business objectives. One of the primary objectives of any business plan is to develop a roadmap for success.


Strategic planning helps investors establish goals and develop a plan of action to achieve those goals. Real estate investors uncertain of their course can utilize strategy planning software to help determine the most profitable niche.


Most real estate software includes questionnaires about various types of real estate investments. Answering these questions can help investors determine if they are best suited for retail or commercial investments such as rental properties, wholesaling or house flipping.


Business plan software helps business owners stay focused on requirements of the business. For example, a startup company has different needs than an established enterprise.


Developing a real estate investing business plan requires time and commitment. This is of particular importance when establishing a plan to obtain startup capital or financing for expansion.


The average business plan consists of 20 to 30 written pages and includes financial projection charts and graphs. Most plans focus on seven topics including:


  1. The Executive Summary – The summary is a crucial element of any business plan. It is the first thing lenders, investors and potential business partners will review. The executive summary needs to be concise, while summarizing the overall plan. This section should include attention-grabbing information which entices the reader to review the remainder of the plan.


  1. Mission Statement – This section is reserved for presenting the focus of the business, what it stands for, the target market, and what sets this business apart from other real estate investing companies.


  1. Products and Services – Real estate investors should include detailed explanations of products and services offered. If you buy houses in a niche market, explain how these houses are purchased and the benefits offered to tenants or home buyers. If you specialize in helping homeowners facing hardships such as foreclosure or short sales, explain how your business solves their problem.


  1. Market Analysis – This section focuses on present and future real estate trends and should describe how the business will capitalize on those trends. Graphs and charts can be included to emphasize market analysis.


  1. Strategy and Implementation – Use this section to explain investment strategies and steps required to achieve them.


  1. Management Team – Whether your real estate business will be established as a sole proprietor, partnership, corporation or limited liability corporation, it is important to include a resume of each management team member; even if you are the only manager. Include each management team member’s qualifications, experience, and duties they will perform.


  1. Financial Projections – Since real estate is an unpredictable market, making financial projections can be challenging. Use information provided in previous sections to project future financials. If the business plan is used to obtain financing, include sales projections for a minimum of three years.


Writing a business plan can seem like a daunting task. Experts suggest working on one section at a time to make writing the plan more manageable. Real estate business plans are intended to provide insight for creating and expanding your business. They are not written in stone and should be reviewed on a regular basis to ensure you stay on track.

Interest Rates: Home Equity Lines of Credit No Longer Simple


Not long ago economists were recommending that homeowners should tap their equity to buy stocks. This is not a very good practice because if you risked your house before the dotcom crash you may have lost your home. For most everyone our home is our biggest cash reserve. It is like piggy bank and dipping into made financial sense when interest rates were at historic lows and home values were appreciating at double digit rates. This appreciation refilled the piggy bank. Now the market is soft and interest rates are up. With that being said is there any reason to dip into home equity?

Home equity lines of credit or HELOC is no longer cheap money. Rates may drop this year but recently the interest rate on this type of loan has been going up. At the avg. rate of 8.7% the interest only monthly payment on a $100,000 dollar HELOC loan is $725 vs. $387 when rates hit their lowest point almost 3 years ago.


You may end up owing more than you own. Lenders have made it possible for you to borrow 100% of your homes value. For example, during the housing boom home buyers that were stretching to afford a home financed the down payment with a HELOC. If you do this today and prices fall, your home loan could add up to more than what your home is worth. What happens if you have to sell for some reason? For starters you will have to pay a realtor 6% unless you are one yourself or a FSBO (for sale by owner). Then you will have to pay the difference out of pocket.


During the housing boom, homeowners financed luxurious upgrades with HELOC loans. Borrowers were confident that the run-up in their home’s value would outstrip the cost of upgrades. Now that appreciation has returned to normal or single digit appreciation you may not recoup everything you put into your home. You’re paying nearly 9% to make an investment that is not a sure thing.


Even though these facts are present you may want to tap your equity for the right reasons. It is simple to do and interest on any loan that is as much as $100,000 is tax deductible. If you are during renovations on a home you plan on staying in for a while or indefinitely then a HELOC loan is good. If you want to costs of high interest credit cards then again a HELOC isn’t bad.


Don’t be pressured by a lender or mortgage broker who says that waiting to take out a loan or line of credit will hinder you from borrowing as much.


Be a smart shopper. You can eliminate rate worries by locking in a fixed rate. Rates on old fashioned home equity loans are lower than what HELOC rates are today; 8.1% on average.

If you prefer the flexibility of a HELOC then take advantage of all competition among lenders. If you get HELOC payments debited from your checking account then this can lower payments by lowering the interest rate by half to a full percentage point.