Does Dave Recommend Home Equity Lines?

Patti wants to know how a home equity loan works and if Dave ever recommends them. He doesn’t but tells about it anyway.

QUESTION: Patti wants to know how a home equity loan works and if Dave ever recommends them. He doesn’t but tells about it anyway.

ANSWER: A home equity loan—also called an HEL in the business—is a second mortgage. You’re just borrowing against your house. They usually have crummy terms at higher interest rates that are variable or fluctuate. They often have annual calls or balloons on them. I don’t ever recommend them. I wouldn’t put my home at risk to pay off the credit card debt for the time you went and bought a steak you couldn’t afford.