Apr012015
10 ways you can benefit from a home equity line of credit
The benefits of using home equity lines of credit are large, and the costs are minimal. Get your free money today!
If someone offered you free money, would you take it? If you didn’t suspect a hidden agenda, I believe you would. Most people would accept financial help from family or friends because people who give gain tremendous emotional benefits from giving. It’s incumbent on everyone to gracefully accept any gift offered to them because it pleases the givers.
Ten years ago, lenders embarked on the biggest gift program of all time when they began making “loans” to people who had no ability or inclination to pay them back. The recipients of these gifts, affectionately known as Ponzis, accepted this free money and thoroughly enjoyed their enhanced lives, lives made possible by home equity lines of credit (HELOCs).
During the early 00s in much of California, house prices rose at rates similar to the median wages, and since lenders were willing to provide gifts to homeowners that matched the underlying home value, millions of homeowners received hundreds of thousands of dollars in free money from lenders.
It was a such a great system that many Ponzis have waited for 10 years just to get another chance to accept free gifts from lenders. When house prices finally bottomed and values rose rapidly, the requisite equity was there, but lenders weren’t feeling quite as generous as they were in the past. But with government bailout money in place and with taxpayers now backing the “loans”, lenders feel more secure about giving away free money to homeowners.
5 Ways a HELOC Makes Home Improvement in San Diego Easier
By Caroline Hailey, March 24, 2015
Most homes are works in progress, and home remodeling projects are often needed to ensure your house continues to meet the needs and desires of your whole family.
Your family needs and desires more spending money. Houses weren’t meant to provide only shelter; houses can provide nearly unlimited money for consumer goods, and every homeowner should take advantage of this wonderful benefit.
And while you might want that new kitchen or bathroom remodel now, the money isn’t always right there when you need it most.
A home equity line of credit (HELOC) could be the answer if you want to make home improvements on your San Diego home now but don’t want to front the costs. A HELOC makes it possible for you to use your home’s equity to your advantage.
Money tied up in home equity is wasted. Liberate that equity with a “loan.” (We all know it isn’t really a loan, but you must pretend you will pay it back or political Conservatives get bent out of shape) 
San Diego’s Mission Federal Credit Union allows you to borrow up to 100 percent of your home’s equity with low interest rates, favorable terms and potential tax savings (consult your tax advisor). By using a HELOC from Mission Fed, you can access funds as needed up to an agreed upon credit limit to make those necessary projects happen.
God bless San Diego’s Mission Federal Credit Union!
5 Ways You Can Benefit From a HELOC
1. Your home remodeling projects don’t have to wait.
You spend a lot of time in your home, and once you’ve decided you can’t survive another day with the old appliances in your kitchen or your outdated bathroom, it’s hard to hold off projects long enough to save money to cover the total cost up front. A HELOC can give you the freedom to make those needed renovations now, rather than live without them for another few years.
You should never have to wait for anything; you certainly shouldn’t wait for something unnecessary and foolish like saving and actually affording what you want.
2. You can take advantage of good deals while they last.
Good deals on everything from contractors to building materials come and go, and they don’t always come on your schedule. A HELOC enables you to take advantage of good deals when they’re available, ultimately saving you money in the long run on those big home projects.
Whenever you fall victim to a sales pitch creating a false sense of urgency, you can justify your foolish impatience by convincing yourself you’re getting a great deal. You will pay far more in interest and fees that you would ever save, but if you ignore that fact, you can have what you want today! Go for it!
3. Your savings can stay in the bank.
It’s important to have some savings in the bank for emergency expenses. Using Mission Fed’s HELOC can ensure your savings stay put without forcing you to forego those remodeling plans.
Borrowing money at 5% (or more) so you can continue to earn 0.1% isn’t a particularly wise financial decision. If you lack sufficient savings to complete the work and maintain your reserves, then you really don’t have enough money to undertake the project. However, if you convince yourself you are a sophisticated financial manager, you can foolishly use debt in this manner and not recognize the folly for what it is. This self-delusion is particularly effective if you convince yourself you add value to your property in the process. Ignore reality! It’s overrated!
4. Continue to improve your house to increase value.
A house is a major investment, and most homeowners want to keep their homes updated so the value can increase. Making home improvements on your house now can potentially help you get your investment back — and then some — if you decide to sell.
Even though the best home improvements only add $0.50 to $0.75 to a houses value for each $1 spent, believing you create value is a wonderful emotional justification for a financial decision that really doesn’t add up. You should recognize that home improvements are a consumptive use of money, but failing that, convincing yourself you add huge value is a pleasant delusion. Live the fantasy!
5. Buy cars, boats and other toys to park in your yard.
Isn’t your house more valuable when you have an expensive car parked in front of it? You will look like the success you are with a nice car. Wasn’t your decision to buy a house a sign of your success? Why not show off a little to your neighbors?
6. Take expensive vacations “on the house”
View your house as a breadwinner. You work hard for your money, so shouldn’t you keep what you earn and spend the “house’s” money instead? It’s not like your house needs the money. Spend it!
7. Impress your friends and neighbors
Your friends and neighbors think about you constantly, compare what they have to what you have, and enjoy feeling superior to you because they enjoy better stuff. Don’t be such a loser! Take the gift money from the bank and go buy better toys than your friends and neighbors. You deserve it! After all, you are really better than they are, and they should know it.
8. Boost the economy and stimulate demand for jobs like yours
The economy was weak over the last eight years mostly because the free money from lenders stopped flowing. If you really want to see the economy take off, take the free money offered to you and go spend it. The increased demand for goods and services will put even more people back to work, and those people will also stimulate economic growth. Whenever you give back to the community by spending in the local economy, the good comes back to you. When you spend, you don’t just help yourself, you help everyone in your community, State, and Country. Spending is patriotic!
9. Get a shopper’s high
Whoever said money can’t buy happiness obviously never went shopping with a credit card backed by a HELOC. Since HELOC money is so abundant, particularly in California, and since a HELOC replenishes itself as house prices rise, you can spend, and spend, and spend and spend.
10. Solve the problems with your drug habit
When questioned about his drug problem, a famous rock star in the 1980s said, “I used to have a drug problem, but now I have money.” Have you wanted to get high, snort coke, shoot heroin, or smoke crack, but you lacked the money to do so? Don’t let money be a limitation!
A HELOC from Mission Fed can give you the flexibility you need to be proactive with those home remodeling projects and start them whenever you desire.
All San Diegans are welcome. All accounts and loans are subject to approval.
Thank you. Thank you so much.
I can’t wait to get my HELOC!
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The central banks of the world are doing everything they can to fight off deflation, yet they’re forced over and over to increase the stakes with even more liquidity.
We’re running out of time and the central banks are out of Ammo (cheaper interest rates) and must now give free $ to hedge fund managers and TBTF banks to perpetuate this charade. Tic, Tic, Tic ..
The answer is less debt and new equity owners … i.e. Economic Reset.
Charade? Absolutely!
http://www.advisorperspectives.com/dshort/charts/markets/nyse-margin-debt.html?NYSE-investor-credit-SPX-since-1995-inverted.gif
Hematic sheep.
If I interpret that chart correctly, the buildup of margin debt is setting the market up for an epic correction. Is that how you see it?
Will never happen.
It already is happening … just look at crude and the US Dollar. DEFLATION is winning and will cause another panic in the markets … just a matter of time.
You know Europe is expecting deflation when bond yields are negative. Why else would investors pay to store money in a particular currency?
BTW, speaking about deflation, based on what we witnessed with the collapse of the US housing bubble and the response of our central bank, perhaps it’s time to invest in Chinese bonds. When their real estate bubble implodes, the central bank there will lower rates to zero and print a lot of money to fend off deflation. People who hold Chinese bonds should do well as deflation will make their currency more valuable, and the lowered rates will make bond prices rise.
China has a MAJOR problem with deflation … the demographics in that country are awful and becoming more awful everyday. Real estate is going to collapse there.
Getting back to the USA … I think the 10yr could drop below 100 bps, or less than 1%.
I would have never thought it possible that a 10-year note could drop so low, but after what happened in Europe with interest rates going negative, I have to say anything is possible.
JPMorgan’s Dimon to Sen. Warren: Hit me with a fine. We can afford it
It’s probably safe to say that of all the elected officials that walk the halls on Capitol Hill, Sen. Elizabeth Warren, D-Mass., isn’t Wall Street’s favorite, but a newly released excerpt from Warren’s book “A Fighting Chance,” shows just how tense her interactions with Wall Street’s bigwigs can be.
Warren first irked Wall Street when she helped to establish the Consumer Financial Protection Bureau, and since being elected to the Senate, Warren has continued in her push for increased regulation of Wall Street.
Let that sink in for a moment.
“So hit me with a fine. We can afford it.”
Wow.
Eventually, Dimon was indeed hit with a fine, as JPMorgan Chase had to pay $13 billion, which resolved federal and civil claims related to the bank’s packaging, marketing, sale and issuance of mortgage-backed securities prior to the housing crisis.
As for Warren, it’s clear that her fight against Wall Street isn’t over yet, but this little excerpt pulls back the curtain on just how bloody those battles can really be.
Hey, in a free market we should let big banks do whatever they wish, no?
Yes and none of the big banks would exist; their shareholders and bondholders would have lost everything.
The arrogance of Jamie Dimon speaks volumes about the power the financial elites believe they have in Washington. Elizabeth Warren is setting herself up as the next populist Teddy Roosevelt who will take on big money. It’s a populist theme that will likely play well in the 2016 elections.
In the late 19th century when Teddy Roosevelt was coming to power, Republican money interests thought they could neuter him by nominating him for vice-president, a position with little or no power over legislation. Unfortunately for their plans, the president was assassinated, and Teddy Roosevelt became president and went on to break up the Trusts and seriously curtail the power of the financial elites.
If Elizabeth Warren doesn’t get the nomination, she will likely get the VP job, and with the undercurrent of populist anger at the financial elites today being very similar to the late 19th century, we have a parallel situation. Elizabeth Warren may have to wait out the term of Hillary, or she may get the 2016 nomination. Either way, if she gets into the White House, the financial elites will not be very happy — which is exactly why she may end up getting into the White House.
You talk as if Hilary is a lock for President. That’s certainly the media narrative right now, but the funny thing is they had her as a lock in 2008, and that didn’t work out so well. The media even declared her the winner of Super Tuesday even though Obama won the most delegates that day. Oops.
Ultimately, math won the day.
If Elizabeth Warren can stoke the populist flames against the financial elites, she could usurp Hillary’s rightful claim to the throne. As you noted, it’s been done before.
The financial elites
believeknow they have the power in DC for good reason….http://research.stlouisfed.org/fred2/graph/graph-landing.php?g=Q88
When historians look back on this recession, nobody will be able to claim the banks were capital restrained.
Indeed.
Ironically, .gov’s are no different than the regular folks only in this way…
when you’re broke, the person/entity who owns your debt owns you.
You guys know this ‘fine’ is 1-tax deductible & 2-paid for by shareholders, right?
JP Morgan might be insured for such fines as well.
You can be sure it didn’t impact his bonus any.
Finally Purchase Applications Rise
Spring buying season begins
The seasonally adjusted Purchase Index increased 6% from one week earlier. The unadjusted Purchase Index increased 6% compared with the previous week and was 8% higher than the same week one year ago.
“There was a broad based increase in mortgage applications last week relative to the week prior. The increase in purchase volume was led by a nearly 6% increase in both conventional and government markets, perhaps signaling that households are finally ready to begin the home-buying season,” said Lynn Fisher, MBA’s Vice President of Research and Economics.
New forward-looking quarterly measure says housing is healthy
A new and forward-looking index of the U.S. housing market published by financial services and insurance firm Nationwide says that according to its survey of 373 metro area housing markets, the housing market is “at its healthiest” since 2001.
The new, quarterly “Health of Housing Markets Report” offers regional and local breakdowns, and Nationwide’s economists offer contextual analysis and commentary.
“Unlike most other housing indices or surveys, the HoHM Report provides a look into the future instead of the rearview mirror,” said David Berson, Nationwide’s chief economist and senior vice president. “The quarterly report should serve as a resource to gauge how healthy housing markets are today but, perhaps more important, what to expect in the future and why.”
LOL! April Fools!
HELOCs Increase 15.8 Percent Year-Over-Year
Let’s party! The free money is flowing
Home equity lines of credit (HELOC) are increasing in the United States, according to Equifax’s National Consumer Trends Report. In 2014, more than $120 billion worth of HELOCs were originated, which is a 21.5 percent year-over-year increase. In addition, more than 1.2 million new HELOCs were opened in 2014, a 15.8 percent increase from the year before. These represent six year highs for HELOC originations.
“Home equity lines of credit, or HELOCs, are attracting more borrowers now that many borrowers once again have sizeable equity in their homes – nationally home values have increased about 26% on average since January 2011,” said Amy Crews Cutts, Chief Economist at Equifax. “Many homeowners with a low-rate first mortgage will be reluctant to refinance that mortgage into a higher rate and rules for cash-out refinance are onerous relative to home equity loans. Over the next several years, HELOCs should continue to attract substantial consumer interest as a way to maintain low rates on primary mortgages while also gaining access to accumulated home equity for home improvements, tuition or other important uses.”
Amy Crews Cutts? Is that name for real?
Consumer Sentiment Strong; Attitudes Positive Toward Wage Gains, Homebuying
While consumers remained positive toward homebuying conditions in the latest survey, the reason for the positive outlook has shifted – prospective homebuyers are now dependent on low mortgage rates as opposed to low home prices. In Q1 2015 surveys, the percentage of consumers citing low home prices was at its lowest level since 2006, while the percentage of consumers who cited low mortgage rates was at a 10-year high.
“The harsh winter weather and the small rebound in gas prices caused some slippage in consumer confidence since the start of the year,” said Richard Curtin, Surveys of Consumers Chief Economist. “Nonetheless, expanding job opportunities as well as more favorable wage gains have meant that consumer spending will strongly rebound during the balance of the year.”
Meanwhile, the Conference Board Confidence Index for March, released Tuesday, jumped from 98.8 in February to 101.3 in March. While consumer assessment of current economic conditions declined for the second month in a row, the percentage of consumers expecting higher incomes rose by two full percentage points from 16.4 percent in February up to 18.4 percent in March.
“Consumer confidence improved in March after retreating in February,” said Lynn Franco, Director of Economic Indicators at the Conference Board. “This month’s increase was driven by an improved short-term outlook for both employment and income prospects; consumers were less upbeat about business conditions. Consumers’ assessment of current conditions declined for the second consecutive month, suggesting that growth may have softened in Q1, and doesn’t appear to be gaining any significant momentum heading into the spring months.”
Economic forecasting 101:
http://www.ritholtz.com/blog/wp-content/uploads/2015/03/dilbert.gif
How to be an amateur economist:
http://www.ritholtz.com/blog/wp-content/uploads/2015/03/dt150326.gif
Perhaps the Welfare State isn’t so bad?
Generous welfare benefits make people more likely to want to work, not less
Survey responses from 19,000 people in 18 European countries, including the UK, showed that “the notion that big welfare states are associated with widespread cultures of dependency, or other adverse consequences of poor short term incentives to work, receives little support.”
Sociologists Dr Kjetil van der Wel and Dr Knut Halvorsen examined responses to the statement ‘I would enjoy having a paid job even if I did not need the money’ put to the interviewees for the European Social Survey in 2010.
In a paper published in the journal Work, employment and society they compare this response with the amount the country spent on welfare benefits and employment schemes, while taking into account the population differences between states.
The researchers, of Oslo and Akershus University College, Norway, found that the more a country paid to the unemployed or sick, and invested in employment schemes, the more its likely people were likely to agree with the statement, whether employed or not.
They found that almost 80% of people in Norway, which pays the highest benefits of the 18 countries, agreed with the statement. By contrast in Estonia, one of least generous, only around 40% did.
The UK was average for the generosity of benefits, and for the percentage agreeing with the statement – almost 60%.
The researchers also found that government programmes that intervene in the labour market to help the unemployed find work made people in general more likely to agree that they wanted work even if they didn’t need the money. In the more active countries around 80% agreed with the statement and in the least around 45%. The UK’s response, though one of the least interventionist, was around 60%.
“Many scholars and commentators fear that generous social benefits threaten the sustainability of the welfare state due to work norm erosion, disincentives to work and dependency cultures,” the researchers say in the paper, ‘The bigger the worse? A comparative study of the welfare state and employment commitment’.
“A basic assumption is that if individuals can obtain sufficient levels of well-being – economic, social and psychological – from living off public benefits, compared to being employed, they would prefer the former. When a ‘critical mass’ of individuals receive public benefits rather than engaging in paid work, the norms regulating work and benefit behaviour will weaken, setting off a self-reinforcing process towards the ‘self-destruction’ of the welfare state. The more people are recipients of benefits, the less stigmatizing and costly in terms of social sanctions it is to apply for benefits.
“However, other commentators suggested that because employment rates are higher in countries with generous welfare states, more people will have positive experience of work. People who receive generous benefits when out of work may feel more inclined to give something back to the state by striving hard to find work.
“This article concludes that there are few signs that groups with traditionally weaker bonds to the labour market are less motivated to work if they live in generous and activating welfare states.
“The notion that big welfare states are associated with widespread cultures of dependency, or other adverse consequences of poor short term incentives to work, receives little support.
“On the contrary, employment commitment was much higher in all the studied groups in bigger welfare states. Hence, this study’s findings support the welfare resources perspective over the welfare scepticism perspective.”
The problem is the question they asked. Having a paid job even when you didn’t need the money means lots of spending on luxury goods.
Yes, if the assumption is that working provides additional money, then most people would choose to work; however, with most social safety nets, if you choose to work, it reduces your public benefits. If the question were rephrased to ask if people would work for nothing, I suspect the answers would have been very different.
The must be your rich man scenario of unemployment. Unless you make more than 100k per year, or the top 10%, regularly buying luxury goods/services is not an option without going into debt. Work is neither fun nor easy so many has to go to work because they has to pay the bills etc…I don’t think working at MCD for $9 is fun or easy even when the pay is abysmal.
I was merely pointing out the obvious flaw in this survey.
[…] When house prices go up, the owner of that house accumulates equity. In the past, this might have caused the homeowner to feel good about owning their house, and it may have prompted a few additional expenditures because the homeowner felt “rich,” the traditionally defined wealth effect, but it wasn’t until lenders started providing access to equity through home equity lines of credit and cash-out refinancing did the wealth effect balloon into the monstrous, greed-induced, free-money orgy it is today. […]