Federal Reserve Chairman Alan Greenspan noted this during an appearance before Congress this month.
interest.com
"So long as home wealth, the value of homes and the equity we have in them, continues to increase, that is clearly going to significantly temper the impact that the decline in stock prices has had," he said.
Thursday, July 25, 2002
Owing More on Your House than its Worth is Risky
James R. DeBoth, President--Interest.com www.interest.com
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We all want to own our own home. What we don't want is to have our home own us. That, however, can happen if you buy a home with no money down, or if you refinance with a loan that leaves you owing 110, 115, or even 125 percent of the total value of your house.
The other way people get "upside down" in a house is with a second mortgage that can leave them owing 110 or even 125 percent of the value of their home. Many people max out their credit cards and then get a second mortgage -- a home equity loan or line of credit -- to pay them off. This option gives borrowers a low-interest loan and usually lets them write off the interest on their taxes. Pridgen points out, however, that the temptation is to run those credit cards back up to the limit again |
