Home-Equity-Down-SideHere's the real scoop on Home-Equity-Down-Side. As a typical American Consumer, you have too much high-interest debt, and it's costing a bundle to service it. Any Home equity disappeared drastically in the last three years. Mortgage are usually higher than the value of your home. Foreclosure is a constant threat. You are more inclined to cut bait and run away from your home than to stand and fight for it. When a lender offers a chance to lower those monthly payments with a low-interest, home equity loan or a cash-out refinancing, it can feel like manna from heaven. But don't kid yourself; no one's passing out free lunches. When you tap home equity to pay off bills, you kiss off those high monthly credit card payments, but you don't kiss off the debt. The lower monthly payment makes the debt look harmless. Look closer and behold the same old Big Bad Wolf; he's just decked out in Grandma's bonnet. Even though the interest rate is less and the monthly payments are low, you usually end up paying, over the long run, more than you think because the payments are stretched out over a longer period. Let's pretend you have $40,000 in 18 percent credit card debts; your current monthly payment is $1,000. Continue the $1,000 payments, and the debt is history in 62 months. Total payments will be $62,000 ($1,000 x 62) and total interest will be $22,000 ($62,000 minus $40,000).Use a 6 percent home equity loan to stretch the payments out over 180 months and payments go down to $338. Total payments will be $60,840 ($338 x 180) and total interest, $20,840 ($60,840 minus $40,000); you'll pay $1,160 more interest with the home equity loan. If you're lucky, the tax deduction will compensate for the extra $1,160. But don't count on it. The lenders are the only ones who can bank on making big bucks on home equity loans. That's why they spend big bucks marketing them. Credit Card Debt:: No MoreNo more credit card debt you say. But that state of bliss is usually fleeting.Tapping home equity makes it too easy to get rid of credit card debt, Why do folks rack up so much credit card debt in the first place? Could they be living beyond their means? Most folks who use debt to get rid of debt forget to change their negative spending habits and end up deeper and deeper in the hole.Home equity loans can be expensive Home equity is something to cherish and preserve, not deplete. Here's the down side no one tells you when you sign off on that home equity loan: · Home equity is a time-proven way to accumulate wealth and provide a sense of security. There is a down side. When you tap it to pay off bills, you become poorer. For most folks, the road to getting out of debt and achieving financial independence is paved with discipline and belt tightening, not more debt. Debt paves the road to bankruptcy court. SMERP, Smart Mortgage for Canadians:Home Equity articles such as these help to confuse the Consumer. Dorothy Rosen writes here for USA Consumers where the rules about Interest Tax deductible are different, For example, US Tax rules allow you to deduct the interest you paid for your mortgage in your home. A few years ago, as a US Resident, you could even deduct the interest Paid on your Visa or Master Card to the Credit Card Companies. These are US Laws that apply to USA Consumers.Canadian Tax rules are different. The interest charges on your Home Mortgage is not a tax-deductible item, usually, the way it is in the United States.. Our Smart Mortgage Plan employs skillful Canadian tax loopholes to make the home mortgage interest fully tax deductible. Now you would appreciate the cleverness in creating a tax deduction where for the majority of Canadians, no tax deduction exists. At Consumer Credit Solutions, we make it happen. We turn the non-deductible debt into a tax deductible debt. That’s why we can safely say we put new money on the table. Americans on the other hand already enjoy the home loan interest tax deduction. Affiliate Credit Advisers also apply similar techniques that comprehend US Tax Laws and have been able to offer tremendous savings. Smart real estate Investing for US Residents.
For US Investors, the trick is to own the One million dollars of Investments in REAL PROPERTY that Uncle Sam will allow you. INTEREST CHARGES ON US Mortgages up to a maximum $1,000,000.00 ARE TAX DEDUCTIBLE. Canadians will give an Eye Tooth for that privilege (Now that we have Smart Mortgage Payment, SMERP Action Guide, only the Cheapskate Canadians must give up that Tooth!!) You see SMERP Action Guide tells exactly how Canadians could make their mortgage Tax Deductible after a few short years. |
