Rayven Perkins has been a stay at home mom, surviving on one income, for over 8 years. Visit her site http://www.stay-a-stay-at-home-mom.com/home-equity.html for more important information about home equity loans and ways to reduce your expenses.
A much advertised solution to current financial woes involves using your home to bail you out of trouble, by tapping into the equity available and presenting you with a sudden influx of cash. This can be a bad idea for several reasons.
The ATM Mentality
If you get in the habit of using credit cards to pay your daily bills and of habitually spending more then you earn, you have succumbed to the ATM mentality. Decide you're too tired to cook dinner? Let's have take-out.
Like that sweater in the window? Out comes the plastic. Want a new stereo system, or leather living room furniture? Loans are easy to get, and you can always pay them off later.
The problem with re-financing your home to pay off this kind of debt is that the extra cash doesn't fix the behavior that caused the financial trouble, just the results. Worse, since the habits aren't broken, the debt can quickly mount again - and you will have already played your ace in the hole. You have used your home in the same way as you use credit - as a quick fix that resolves nothing in the long run.
There is a very real danger in using your home as an escape hatch from the consequences of irresponsible behavior. If you are struggling to cut down on your bills, reduce your debt and become a stay-at-home mom, there are other avenues you can take to get out of debt that do not involve risking your home. Adding more debt to your situation is never the way to reduce debt.
The country as a whole is in a mortgage crisis due to mortgages being upside down. Too many home owners have used their homes as ATMs to the extent that the total amount owed is more than the house is worth.
Once you use the equity in your home, it is lost to you until you pay it back in, which can take years. In the meantime you have added to your monthly burden and added to your total debt in the form of interest on the new loan - which, if defaulted on, can cost you your home.
As with any rule, there are a few special circumstances when using your home equity mighty make sense. If you are in desperate need of a vehicle, you might get a better interest rate off of a home equity loan than you would from the dealership. Another scenario might include using the money to fix your home up for sale, although careful consideration should be used to ensure that the money spent will increase the home's value and will be recouped upon sale.
In most cases a refinance for the sole purpose of debt consolidation or a home equity loan is not necessary to reduce debt; there are other, safer avenues that will help you learn how to manage your finances and eventually free you from debt without the risk of losing your home.
- Related Videos
- Related Articles
- Ask / Related Q&A
- Ways To Use Your Home Equity For Debt Consolidation Loan
- Bad Credit Personal Loans Uk, Self Employed Loans, No Equity Loans, Debt Consolidation Loans, Fast Loans
- Using home equity for debt consolidation might end up in losing your home!
- 125% Home Equity Loans for Consolidating Your Debt
- Should I Take Out a Home Equity Loan to Consolidate Credit Cards?
- Consolidate Debt With a Home Equity Loan
- Personal Loans Uk, Bad Credit Loans, Self Employed Loans, No Equity Loans, Debt Consolidation Loans
- Using Your Homes Equity for Debt Consolidation: Things to Consider




For Florida homebuyers the FHA home loan just makes good sense
By: FHA home loan Lender | 06/12/2009For Florida first time home buyers and other borrowers, the FHA home loans can have key advantages
Take the proper Steps to Get Your FHA Mortgage today
By: FHA home loan Lender | 06/12/2009Purchasing a Florida home is one of life's major landmarks and for some, it is even a dream come true. At FHAmortgageFHAloan.com we understand the importance of this decision and it is our goal to make your acquisition into home ownership memorable. Regardless of whether this is your first Florida home or your third Florida home purchase we will do our best to ensure that getting you into your new Florida home is a pleasant and memorable experience.
FHA mortgage, FHA Loans for buying a Florida home
By: FHA home loan Lender | 06/12/2009FHA Mortgage Loans for Buying a Florida Home or FHA Mortgage Refinances are Fast and Easy with FHAmortgageFHAloan.com. FHA home loans allow first time Florida home buyers and current Florida home owners buy a home with less than 3.5% down or FHA home mortgage refinance up to 96.5% of the homes value.
FHA home loan program is a FHA mortgage loan designed to assist every Florida homebuyer
By: FHA home loan Lender | 05/12/2009FHA home loan program is a FHA mortgage loan designed to assist every Florida homebuyer. FHA Home loans down to a 530 FICO.
Easily Get a Mortgage Refinance or Modification with Bank of America
By: MPetrone | 05/12/2009Bank of America is now able to offer mortgage refinancing and modification to homeowners in all sorts of bad situations. This is all because of over $75 billion in funding from President Obamas stimulus program. With this program and Bank of America, a homeowner will be able to easily lower their monthly payments, change the terms and conditions of their loan, or get cash back from the equity that has built up on your home.
Don’t Take a Mortgage Interest Rate Rise Without a Fight
By: David Nalin | 05/12/2009More than likely if you have a Standard Variable Rate Mortgage you face at least a $50 monthly repayment increase. Whenever the Reserve Bank opts for an increase in the official Cash Rate, you will need to, more than likely, look for additional similar increases in the ensuing months.
5 Bankruptcy Questions To Ask Your Attorney Before Filing
By: junior will | 04/12/2009If you think that being bankrupt is the worst thing that could happen to you than think again! Yes you are right…Worst is yet to come, but of course you can control and eliminate that worst scenario by simply making correct decisions! Hiring a wrong attorney for filing your bankruptcy can be like a nightmare coming true!
Does Your MLM Company Pass the Product Test?
By: Rayven Perkins | 03/10/2008 | Home BusinessSo you've been asked to join a network marketing company, but you are unsure if it is a pyramid scheme or not. Ask yourself these simple questions to determine if the opportunity is legitimate.
Finding Product for eBay
By: Rayven Perkins | 26/09/2008 | Home BusinessSo you've sold off all of the extra items in your household through eBay and found you liked it. But how do you acquire more merchandise to sell on eBay? Opportunities are all around you if you know where to look.
Ebay Garage Sale Tips
By: Rayven Perkins | 19/09/2008 | Home BusinessIf you are like many new eBay sellers, garage sales can be a great source of cheap items to resell on eBay. Read these tips to make sure you are prepared to get the best price!
Running a Home Daycare, Income for Stay at Home Moms
By: Rayven Perkins | 12/09/2008 | Home BusinessA perfect solution to needing extra income is to start a daycare. If you're a stay at home mom, you are used to having little ones underfoot - a few more really makes little difference, particularly if they are near your own children's age.
Test Drive Offers - Are They Worth It?
By: Rayven Perkins | 05/09/2008 | CarsHave you heard that you can walk into a car dealership with a special invitation and get compensated for test driving a vehicle? No, it's not mystery shopping. Often, you don't even have to actually drive the car!
Your Digital Camera Job is Waiting!
By: Rayven Perkins | 29/08/2008 | Business OpportunitiesAre you looking for a unique way to earn some extra money? Put your digital camera to work and capitalize on your love of photography. The perfect opportunity for a stay at home mom.
Your House is Not an ATM
By: Rayven Perkins | 26/08/2008 | MortgageIn today's economy, many homeowners are so far in debt there seems like there is no way out. From small business owners to students, seniors to stay-at-home moms, everyone seems to be struggling under a load too heavy to carry.
Six Gourmet Food Consultant Home Party Tips
By: Rayven Perkins | 22/08/2008 | Home BusinessThe perfect job for a stay at home mom is to become a representative for a direct sales gourmet food company. Can you imagine getting paid to eat and party? This job can bring in extra income with just one or two parties a week, and you can supplement in a variety of ways.