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Home Equity Line of Credit - Dave Ramsey Rant
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- čas přidán 4. 09. 2024
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HELOAN, HELOCs and cash-out refis should ONLY be used as leverage for investing in rental real estate. If you have sufficient equity in your primary residence and you’ve done your due diligence and the numbers work out on a great deal, a HELOC is preferable as you can pay it off when your ARV (After Rehab Value) on the new acquisition is enough to refinance the total debt. Service that debt from the rental revenue and enjoy the residual net cash flow. Then use it again on future acquisitions. This is what I’m doing.
1. Avoid big banks for HELOCs (especially BOA)
2. Try smaller local banks & credit unions. (I use a credit union)
3. Filter your online searches to lenders offering HELOCs that accommodate your goals.
4. HELOCs should ONLY be used for short-term rental rehab capital.
The intent is to force sufficient appreciation (ARV) to refinance the total debt with a new fixed, low interest, 30 year loan. The rental income should more than pay for the new mortgage with residual monthly cash flow and tax benefits. Repeat and scale to retirement net worth. Don’t give up! It works!
The only way I was able to scale through all of this without stress was by working with a financial adviser. My adviser *ROCHELLE DUNGCA-SCHREIBER* has always had my back all through the process of property investment and investing in general. You can glance her name up on the internet and verify her yourself. she has years of financial market experience.
lol. this thread is a fkn joke.
I did a home equity loan built my mechanic shop tripled my income from 33 to 100k after expenses went from a dealership to owning my own shop paid it off in 3 years so sometimes you can make money with a heloc
Any advice or everything went smoothly for you with repaying?
@@jgirl4life07 marketing you tell everyone ooh know you do mechanic work and every business you buy fast food just to give out ur business card
You’re lucky! If things had gone the least bit sideways, you would have lost your business and your home. Thank goodness it worked for you this time, but be careful recommending this.
@@jonnygunn6259 lucky not so much I work a lot now if I got disabled then yeah it wouldn’t be any fun but I had no other debts besides my home my wife could cover the payments if I got disabled and if I died she be rich got big life policies
Congrats! 👏 That's wicked smart.
I applied for a home equity loan and what Dave describes is exactly what I got in the terms. Can't believe people fall for this. Seriously the bank can change the terms any time they want to any rate they want. I got scared and backed out. Thank goodness!
That's why you ask for a fixed rate
Dave is intentionally misleading people here. A heloc and a home equity loan are not the same thing. A heloc can be called dur by the bank, but if you're doing it right, you only have one to two months of mortgage payments due at any given time. Look up credit card float. Think of the heloc as a credit card.
inXS How can I use the equity of my house that is already paid off?
Get a fixed rate.
You asked for a fixed rate. 😊
2018: this is the time to sell
Me in 2021: hahahahahahahaha
EXACTLY!
Difference is now you can't find a house once you sell yours lol.
@@TonyNguyenFR so take out a Home Equity and buy a 2nd, keep it rented and real the equity from both properties.
Da impending house crash of 21
@@TonyNguyenFR 🤣
I work at a bank and have seen multiple people use home equity to use as money down on new rental property investments and make a ton of money. As long as you are using it to make money I see no problem.
I'm using it now to build a house. as long as u get a fixed rate you good. I guess im.dumber then a rock lol
They did a video about the brrrr method and laughed like no one is rich off it. Lol keeping the sheep in their herd I guess
@@johnnycalderon9951 you can’t get a fixed rate for a heloc. Do you mean fixed rate for the new home you’re building?
@@ash86marie yes you can. There are fixed rate helocs and they are very often below standard mortgage rates
@Small People you may be referring to a “heloan”.
2018 was a good time to sell. Until 2021 came along.
I bought my house in summer 2020 and my houses value has increased over 25% in less than a year.
Bought mine in 2017 for 280 and it's worth about 450 now. Been rented out the entire time, luckily.
2021 great year to sell. Bad to buy.
LOLs
Bought my house in AZ, July 2018 it's increased over 85% I've been dying to sell. Going to put in for a base outside the state so i can move that 185K + onto a rental property. While using the VA loan to get into my primary home.
"Stupid looks smart when times are good." True!
My Dad bought a $300K house in 1993 here in San Jose. It's worth $1.6 Million now and because he took out so many Home Equity Loans, he lost the House and has nothing to show for it. I will never borrow against my house.
Lol. Loser. Make horrible decisions, expect to reap the consequences 😮
i did a HELOC in 1997( 60% of value)...it closed in 2012. paid it off within 10 years. intrest rate never went above 4.25%
this worked for me, as my house went up 150% in that 10 years! i now have 100% equity in a house that double in value
how does it work ?
Works like a CC, you only pay interest on what you use. Easy to get, most banks don't charge up front fees. Makes life easier.
Ramsey is a doom and gloom guy. Do your homework, shop around.
Ramsey is wrong...mine was based on the federal reserve...prime plus 3.5%
His speech that making your home better/ more valuable, is crap...that's crap. Just use what you need, especially important things like dental or medical care.
“Now you’ve financed a freakin’ steak over 30 years.!” 😂😂
This right here took me out 😂😂😂🤣🤣🤣
Got a 30 year mortgage in '99, refi'ed to a 15 year loan in 2005, and paid the home off in 2018. No 2nd mortgage, no HELOC, no reverse mortgage, !!!
I like this idea. Do you have to get a certain kind of HELOC?
@@robertarogers998
If you want to cut the length of your mortgage, timewise, or the effective interest your mortgage is at, and the amount of interest you have to pay over the course of your homeloan duration, JUST DO THIS: Pay your monthly payment with some additional that is directed just to the principal. Now, if you can refi to 15 from 30 and get a significant interest rate reduction simultaneously, that can save you more than the cost of refi, then do it. If you can't save enough from rate reduction to justify it, then just keep on with your additional payments to principal.
My 30 year loan was at 7% and dropped to 5.5% when I refi'ed. That was worth my doing it. Had there been little or no rate reduction, it would have been impractical to refi and I would have just continued to throw extra money at principal. Hope that is clear.
@@1redrubberball My interest rate is 2.63% I close tomorrow it's on a 30 year. is that good? I'm 23 and kind of wish I had more guidance through this process. I rushed it a bit but I love the place I'm going to have. I plan to refi as soon as I can to a 15 but I don't know if it's a good idea at this rate.
@@jacobjohnson9030 Sounds like you are on a good path and that interest rate is very good as well. I was around 51 before I could afford a house, but better late than never. At that interest rate, I wouldn't worry too much about a 15 yr mortgage right now. With the dismal economic forecast we all seem to be facing, just getting thru the next yr or two may prove challenging. If your circumstances allow you to, you can actually pay a little more to the principal each month going forward and shave years off your 30 yr mortgage. That will also reduce the yield on the mortgage to the holder to below that already low rate. Even $100 mo more to principle for several yrs has an amazing effect on how many yrs it can shave off the mortgage term. Good luck!
That’s because u were able to pay a bigger monthly payment to pay it off , Some people like to spread it out pay less now on the mortgage and use the saving to reinvest in purchasing other properties or other necessities - what was your nterest rate and the monthly payment on the 30 year and what was the interest rate and monthly payment on your 15 year refinance ?
Unless the 10+ banks I inquired about HELOCs are outliers, they tend to be tied to the Prime Rate, not just the "lender's mood".
I am old enough to remember my grandparents warning me to never ever pay unsecured debt with secured debt. They rode out the great depression and barely was able to keep the farm. If they had borrowed against it they would have lost it. Loans for seed, fuel, etc for the growing season was all unsecured debt. Paying that with equity would have lost the farm when times became tough. This lesson was well learned. The sales pitch is strong to roll a 17% loan into a 3% loan, but don't do it. The reason the one loan is 17% is because it is an unsecured loan. Ensure you can keep the very basics for life during hard times. 1 HOUSING. Never borrow against it. 2 FOOD. Never bet the farm. 3 INCOME. Never put your income in jeopardy. Many local farmers lost their farms to mega farms. This is how family farms get lost in hard times. They get bought for pennies on the dollar from the banks and creditors that had a secured interest in the property.
I appreciate the lesson and the way you explained it!
This is a great lesson and how fortunate you are to have grandparents that instilled a lifelong wisdom
Get life insurance policy will cover the equity loan
💕💕💕🌴Thank you
I got a credit line of 60,000 and the monthly payment was around 295..I used the money to built a guest room and i rented it aut for 875 and the money from the rent was used to pay the credit line debt..now its paid off
....good moved....
As Dave has said before. My grandmother is 90 and smokes like a chimney. Does that mean smoking isn't going to kill me early? You had a good plan. Im in the building industry myself. But a better plan wouldve been to have planned and saved for the build. But anyways nicely done!
Yea it's easy for him to throw out heloc is bad he is sitting on millions.
Awesome 👍😂
How long are the terms on that credit line
At least you didn't buy a motor home or new car with the money.
"I want a new kitchen, princess...shut up!" 😂😂😂
Lol
This is the exact reason why I'm considering it. After this video definitely not!
😂😂😂
Thank you so much for this video! I really appreciate, I was referred by Ted, he helped me throughout the whole process with no extra cost. This is my referral as promised
mx076 on wickr or telegram.
🤣🤣🤣🤣
Every single multi-millionaire/ billionaire who invests primarily in real estate borrows money against the equity against said real estate. It's tax free.
I 'ate' my house twice: went from owning it to now owing $51k - I am fighting my way out of this self-created issue ... thank God I was born with the optimism gene! All will be well, I am sure. And I hope God just heard me say that! 😅PS: I have a chronic generosity problem! AND I undervalue myself. Darn it... it's taken finding Dave Ramsey in my senior years to be able to admit all that!
I took out a home equity loan. I am retired and not able to work. The loan was enough to maintain my home (windows, door, storm doors, countertops (laminate), and various other projects. I am paying off the loan and feel I made a good decision to keep my property value high. I would like to mention that the loan is one fourth of the value of the house. With no prepayment penalty, I can pay back this loan in 5 years. Budgeting and cutting unnecessary expenses also helped. If I should need a loan again I would only consider a personal line of credit for a short term. There are other alternatives to consider.
I had an extremely good experience using my home equity to make some very good deals and improvements on purchases, paid everything off completely and stacking up cash now so i don't agree with this advise as a rule. Be disciplined and use it wisely.
Go away
My dad made multiple millions using home equity loan to buy houses in 2010...pretty smart move if you ask me
My thoughts exactly. They don't tell you that part
We aren't into the millions but did the same thing. Bought cash, pulled money out, bought more cash. Scaled up quickly, paid down aggressively. Everyone needs multiple tools in their toolbox. Not everyone can live with their parents and never buy anything so they can save 150k to buy a house, gotta take a deep dive and get creative.
No Dave. No 7th grade Econ class. That’s why I’m sitting here listening to you.
If you sell your house in this white hot market and make some money, don't you have to go find another place to live? If I had more than one house then yes I would sell one and make some money. But I only have one...
Patrick Bateman rent until the market crashes or you can find a deal
Cass on point 👍🏽
Ok well im "thinking" of selling my house... Now what? I don't have another one.
Patrick Bateman you should rent until market goes down again... if you listen to Dave Ramsey regularly you would understand why renting is not always bad in a situation like this... when it makes sense to buy again you buy again... usually people aren’t thinking of selling their house for no reason... usually is because they just want something different or thinking of a new job somewhere else but just thinking of selling for no reason is not what he means
Hey Pat, find a "fixer upper" ...then pocket the extra cash. You'll also end up with more equity in the new property if you do this.
Never buy on the high. I did it, regret it, lost everything - lesson learned
This 👍👍
Except you don’t know when the market is at the top...until you know. It’s always a risk.
Did you buy in 2007-2008?
In 2007, right out of college a coworker, who also did loans, said she can get me into a house with zero down. Im like HOW? I make 45k a year.......a few years later we know how.
Mark...me too in 08-10
@@jakevillaret Yeah. I bought while it had gone up quite a bit and was still going up...that's what I mean by "on the high';
What goes up must come down...and down it came. Bought a house in 2006-2007. 2008 Recession hit and I lost my job, my house, unemployed (apart from some odd jobs) for 4years...
For now I will save...if the market tanks again, THEN I will buy, if I can
I love Dave and his advice but I semi disagree with this post. I work at a bank and all of our Home equity products are tied to prime with an adjuster (that is set, not variable) or the five year treasury. We cannot just change rates because we want to. I do agree though people use the equity in their homes for stupid stuff. I think if you don’t use it to increase the value of your home then don’t use it.
Thanks for the insight! I personally have a HELOC and use it ONLY for investments. The investments ideally should cover the HELOC plus more.
Or have another plan to return that money after investing?🤷♂️
There is also a difference between a Heloc and a home equity loan. The layer is fixed interest with fixed payments.
can I use the Heloc to buy my primary residence ! Do u think that is a good move instead of getting a regular mortgage!
I watched this when I contemplated getting a HELOC loan. Dave always motivates me to push forward and keep my head down
This is exactly what just happened to me haha
OMG I just got off the phone with a lender and came straight to Dave's videos to find what he says about a HELOC so when they email me I'm telling them never mind lol. It should be common sense that you're not getting rid of the debt just moving it around but I just needed to hear him say it lol
Yup, keep your head down, work work work till you're an 80 year old millionaire. Then you can go have fun with your millions. Yup, solid advice. Meanwhile I'm enjoying life today with my kids, cars and toys while you work work work like a busy bee just so you can say you're a millionaire while rolling around in a wheelchair in a retirement home.
@@saidtheblueknight you got issues dude lol
@@awallacereviews he's right. Ramsey is for people so deep in debt they're afraid to breathe and maybe one day payoff debt then die.
For a split second I though he was gonna drop the f bomb then said flip 😂
I did too. 😂
It is really the same thing. It is a replacement word. Just like freaking.
Same. But it's really the same intent behind it. This isn't the same Dave Ramsey from financial peace University
🤣🤣🤣🤣🤣me too
We all know what he's thinking when he said it anyway.
Can you imagine going out to eat with Dave, when the check comes you hand over your credit card...ooo aaaawkward.
Pull out some cash instead. He thinks that would be painful spending.
I'd do it just for the reaction 😂
Thank you for advice. I was considering a partial home equity loan for siding, windows and gutters. But I only have 5 years left and I will be debt free at 53 or 54. I guess I'll find a better way.
uber? cleaning dishes somewhere? part-time job? taking care of someone's dog or kid?
He doesn’t want you to take out heloc. He wants you to sell with his realtor list so Dave Ramsey can get a portion from your home sale.
Exactly
@@comfy_rwds the proof is his video promoting you to NOT use a HELOC!
And his other vids promoting realtors associated with him. He gets a cut from the commission they get.
It's obvious.
Dave is absolutely right. The equity in your home (the value minus the amount owed, for those of you who never listened to Dave) is NOT A BANK ACCOUNT!!!!! That's part of the way we got burned in 2008. Your house is worth a certain monetary value as a property, but is priceless to you as a home. Don't do anything to jeopardize the second fact.
Anybody can sell a house by themselves (Common sense required). He basically just called me "stupid". My stupidity allowed me to keep 3%+ off the sale of my home.
👍🏽
He also said that people hire someone for the taxes, to fix a car etc. Those are also things a lot of people do by themselves. It was a pretty condescending comment from DR.
I will maintain what I've always been saying. Ramsey's a fraud.
I love the HELOC, it is the best thing ever if used correctly. Just like a plane or a car is. They are scary and terrible if you drive or fly irresponsibly. If you use a HELOC irresponsible--BAD idea. Use it correctly, it is a massive benefit. The key is responsibility--be responsible.
exactly! I learned this the hard way. I just contacted maliandebt to see my options
absolutely!
I just heard about it today. This stuff to me is confusing but I'm trying to look into it.
Daves main listeners don't have discipline.
The key to using a HELOC "responsibly" is KNOWLEDGE! Remember that Dave Ramsey's business caters to financially ignorant people who have gotten themselves into massive debt and want SOMEONE ELSE to get them out of debt. People like you who have taught themselves to understand financial tools and investments will rarely, if ever agree to what Ramsey teaches. He caters to people who are still learning "Baby Steps!"
Until I saw the upload date for this video I almost thought it was made in 2009. The remedy for Dave's entire rant is to shop around. There are, in fact, banks that will give you a HELOC or home equity loan with $0 closing costs, no call options, and fixed interest rates that are set by the 10 year treasury bonds. If you borrow equity from your house to fund a cash flowing investment property, the only downside to that is you can't deduct the interest on your tax return. However, this downside is usually offset by the depreciation deduction so it is minimal. The fact is that although house prices are like a rolling hill, sometimes down and sometimes up, rental income trends upward steadily. Therefore, it is NEVER a bad time to invest long term in rental properties, as long as they are cash flowing.
Thank you, that make so much sense
This is valuable information.
What banks are you referring to?
Most banks do have call options in the fine print. So be careful
@@TopVillain You are correct sir. IMO if you find a good deal..and are financial disciplined and find a cash flowing real estate investment..instead of a steak a heloc coud be a good option
Never forget the saying, "a fool and his money are soon parted."
Has anyone noticed that his impersonations sound like Clevand from Family Guy?
He does. 😂
I've listened to this guy for years, he's very risk averse. Fact is, you have to take on debt to start a business or invest in yourself -- so his theories apply only to individuals with high incomes. A HELOC interest rate is not arbitrary and can be 20% less than a credit card rate (not to mention it being tax deductible). Managing your debt is the key, not spending it as income.
He's talking to the people taking on debt for stupid reasons not smart reasons
The rate of new businesses failing is very high in the first year I would never borrow against my house
@@benjamyytioneb4638 someone's trying to do something dumb and calling it smart. Starting a business or investing in education are not dumb things. But putting your house on the line in the hopes that it will work out is. Not only is cash flowing those things safer with more long term security and stability, the extra time it may take to build up the cash reserves or acquire business or education grants and scholarships will allow the person to learn more along the way and be in a better spot when they do make it to the other side.
🤡
@@benjamyytioneb4638 but he said paying off high interest cards is stupid.
That was a horrible recommendation to sell R/E 5 years ago. Someone was looking for commissions.
Sell right now? in 2018? This did not age well at all. Dave I bought in 2018 and my home is worth double now in 2022. You were so wrong.
I don’t know what we would do without your advice Mr. David, You always strike the heart of the issue without the glaze.
Have more money??
I bought a home while I had a student loan and am selling a few years later…for $200k more than I paid. Why is his advise good??
Had a property that appreciated???
if the prices are the highest to sell your home then doesn't that mean you will be paying more to buy another at the inflated rate? i don't see the incentive if your just swapping the high point for your current home for the high point of another house.
goalieguy55 well you might time it right by selling then rent short term until crash then buy.
@@jerrylisby5376 A crash can take years. Before 08,when was the last housing crash?
Build
You are right. It pays to sell if you downgrade or move to an area where housing is significantly cheaper than your current location.
TeamDATL Tae I was told building will be more expensive ?
Dave Ramsey 5 years ago "If you are ever going to sell your home sell it now!"
5 years later, house market is on fire, had you listened to his financial advice you would have lost potentially hundreds of thousands in value as the market currently stands.
That's why I want to take out a line of credit buy land and build a new home. Rent out my current home and allow it to continue to build equity.
I like how he said to sell while the market is high, but never mentioned you’ll have to PAY MORE for your new house that has an inflated price….😂 🤷🏻♂️
He just wants to make money off the transaction of you selling
This is my third home purchase with the equity line of credit. I don't know what are you talking about. The tenants paying for everything and I get the return cash.
Hes saying that heloc is a callable loan
Lohe221 a HELOC isn’t a loan it’s a line of credit. There’s a difference. If you’re smart this works. Dave isn’t very smart in general. I watched a video where he told someone to payoff a 0% loan as quick as possible when they have a mortgage!!! Dumb.
@@shaneweddle4197 Dave says that psychologically it is better to pay off the small debts first, so you feel like you are accomplishing something. Or did you not actually understand what he advocates?
This is exactly what I am preparing to do.
Exactly! i ddidnt know this until i saw Daves video
Title of video is about a HELOC but your whole video just talks about home equity loans. There is a difference.
had I sold my house 2018, I would’ve lost out on $130k in equity…. I think I’ll keep it and rent it out forever
We looked at selling our house when the "market was hot" but couldn't find a new house. No less than 3 times we were beat out by "cash buyers". Three different real estate agents told us that some were Chinese investors and some Canadian.
When the market was down, one guy told us it was a Google executive buying up property just to hold it. We counted around 15 properties he got in my area at dirt cheap prices.
So, since we were going to have to finance a mortgage anyway, we decided to stay and improve our current home. I can do a lot of the light remodeling myself but will hire out for the larger parts. We will have to borrow some of the equity in order to remodel.
Our first step was to get out of debt - thanks Dave. We could not have done it without your advice about cash flow.
Our total payments are lower than a newer home would have been and we expect to have everything, mortgage and HELOC paid off in the next 7 years.
You wrote this entire paragraph in order to justify to yourself that your HELOC was okay.
He doesn't know how HELOCs work. My HELOC isn't "callable". Only if I default on the loan can they require me to pay back in a lump sum. My rate is not whatever the "banker's whim", it's based on the Wall Street Journal's prime rate. The HELOC allows you to buy income producing assets, not to "finance a steak over 30 years".
I remember those home-equity-loan days.
People used their house as an ATM machine, pocketing the "increase in value money." It usually didn't end well.
Notice he read the statement that people are considering an equity line of credit, then went on to talk about an equity loan.
I think it really depends on what you use the HELOC for, if you use your leverage properly to build wealth and into the right investment, then it can work.
facts
But careful too.. that's why lots of people lost all their properties during the 2008 bubble.
I agree, it’s not bad to use it to create wealth
It will definitely help if you use it wisely. Let's say: HELOC is about $50K. Take a 10K chunk first and pay it off. Then move on...
@@vagnerpilar at the end of the day, you're putting your house on the line. It just adds stress. And if the justification is that you have enough money or extra income to cover the downside risk then just be patient and use that money for your business/education/smart reason. Not only is it safer and more sustainable but without the stress of the risk, many make better long term decisions.
30 years old, me and the wife close on a house in the coming up week. I've been watching so many of your videos. Only debt we currently have is her car payment, which has about 2 years left. Gonna get this house paid off ASAP. Thank you for all your advice Dave.
Congrats! I'm 38 and own more than 1/2 our home already.
@@Idiotsincarshere I'm 47 and own only 10% of ours. But, I plan to use the equity to make a large down payment on a much downsized home.
@@kbanghart That should ensure a much lower mortgage payment !
@@Idiotsincarshere yes, I can't wait. Right now 38% of my take home goes to my mortgage! But hope to get it down to 20% or maybe even 10
@@kbanghart So did you buy a new home with the home equipment ? Did you rent the house ? Just curious . im planning doing the same thing like you
'financing a steak over 30 years" and this is exactly why I did not get all the fancy upgrades when I had mine built. People thought I was crazy when I said I didn't want to finance granite countertops and tile floors for 30 years.
Not only am I old enough to remember I had the foreclosure and bankruptcy scars to prove it happened.
Agree with most here but if you can sell your own house do it. Real estate is a scam like travel agents. If can’t plan your own trip you shouldn’t be traveling.
He didn't talk about HELOC, he talked about Home equity LOAN. and i agree, is stupid as it can be.
Exactly. Title is misleading.
Whats the difference between HELOC and home equity loan?
Same thing
That's what I was thinking.
This is the first Dave Ramsey video I have watched, and it was pretty disappointing. I'm a "banker" for U.S. Bank, I handle HELOCs frequently, and this info is not accurate.
The HELOCs "variable rate" varies with the prime rate of the market. This is the same for personal loan rates, auto loan rates, HELOCs, Credit Cards, etc.
The banker's mood has no effect on rates. A typical banker in a branch has no bearing or decision making on the financial institutions' rates. They are salesmen.
HELOCs can be used in a variety of ways to add value to someone's financial picture.
accessing home equity to remodel a house before selling. example, you have a 400,000 home. you owe 250,000 on the mortgage, you have 150,000 in equity. lets say you tap into 15,000 of that home equity with a line of credit to perform cosmetic upgrades on your house. Let say after the upgrades your house is now valued at 430,000. You have gained equity in this sense. now the home is 430,000, the original mortgage you owe 250,000 on and 15,000 for the heloc. that's 265,000 in debts against the home. 430,000-265,000=165,000. Boom, you created your own equity. Its like borrowing money from your own homes value, to flip your own home, to add value to your own home.
Just because you get a HELOC doesn't mean you have to use it up? you can just leave it as a open line with no balance on it so it can be a tool to save you on a rainy day or major life event think about the big stuff that bankrupts families like cancer. Do you have a credit card that is emergency only? A heloc can be used the same way, except your interest rate will be around 3-6% vs 15-25% on a credit card. Which sounds smarter?
Dont abuse the line of credit. if you use it as Dave says in this video, just buying everything and repackaging the debt under the mortgage, you lose your equity and you are back to square one on paying off your home. But used strategically and can be a valuable financial tool.
You are a idiot. Come on Dave's channel spouting how being in debt is a good idea. Dave has way more real estate experience than most people. He owns tens of millions dollars of it. Oh and a 200 million dollar net worth. Bottom line is Proverbs 22: 7
Debt is never a financial tool. It's debt! The only real financial tool is cash.
NEVER borrow money against your home, it could be the beginning of a debt cycle you will never get out of.
Say it again, for those in the back👍🏽
Sometimes you have to, theres no option when you need the money. Unforseen life events. What he preaches unfortunately does not fit all circumstances.
If the interest rate is low.enough it's not a bad idea. It would make a great emergency fund. Just because you open up the credit doesn't mean you have to use it.
The title is way off the mark. Home Equity Loans are not Home Equity Lines of Credit...they are so different they don't even resemble each other
Ramsey you are not talking about HELOC!!
Sold my house. Now I'm homeless but hey I'm rich!
should have kept it and rented it out.
@@freddymendez3655 .....and still be responsible for wear and tear, dealing with tenants, property taxes, ....ect.
Hmmmm......
Now you could live in a really nice van, DOWN BY THE RIVER!
@@freddymendez3655 that’s what I did to mine best decision ever
@@KingjamesAV1611 exactly. No thanks. Heard too many horror stories.
Keep in mind when you sell your house at a high amount your next house will cost you a premium as well. It’s a wash. Enjoy
Amen. Oh cool I sold my house and made $200k!… which is just going to go to the next overpriced house
Unless you move to a more affordable area and maintain the same income.
Bank of America does not have any call language in their standard HELOC. They also set the interest rate percentage when you open your HELOC, it isn't variable. You don't have to use your HELOC at all, you can just have it opened and have a zero balance. We opened a $250K HELOC to increase our credit score and have always kept it at a zero balance. Just opening the HELOC increased each of our credit scores by 30 points. We don't plan to ever use it. However, increasing our credit scores and locking in a 4% HELOC interest rate for free, hasn't stopped us from being millionaires. Just be responsible people and your income will make you a millionaire. If you are irresponsible, then you shouldn't open a HELOC or a credit card, because you have no self control. You can basically do whatever you want with self control... it is far better than what Dave preaches, but his average listener is irresponsible and can't control themselves.
I was one of the blessed people that was able to sell my house in 2009 and made a profit and bought my new home foreclosed... best thing That ever happened to me... thinking of selling again and get the max!
And my family and i are the blessed ones who bought low in 2009 for a brand new house we watch built from the ground up for only $180k at that time. House is now worth $350k to $385k...cheers🍺🙂.
@@j.l.salayao8055 dont think we will see that again in our lifetime.. that was a Blessing... glad to know ur family was able to do that.. it was a sad time for all the ones that lost their properties..
"You didn't pay off your credit card debt..you moved it!"..😂😂😂
First the rant, then the sells pitch....to use Dave Ramsey’s real estate agents to sell your home. That was a smooth transition 😂
Ramsey doesn't get money from the recommended agents though. It's not really a sales pitch, he just vets the agents and tells you who the good ones are.
@@mtMage3 gtfoh he gets paid for it
@@mark3684 Have you worked with any of the recommended agents and asked them how the system works?
The rate of return from home equity has been, and always will be zero. (Yes, really.)
But borrowing against your home incurs an interest rate expense. If you can beat that interest rate expense (invest for cash flow with arbitrage), you're dollars ahead. Risk vs. reward.
I think it's wise to have a HELOC for emergencies. Drawing against that HELOC is up to you.
This video is not titled correctly, it should be Dave Ramsey's rant on home equity loans. Home equity lines of credit are different than what he's talking about.
my bank calls me weekly trying to get me to take out a home equity loan and I decline everytime...Word of advice the bank will not call you out of the blue to simply do you a favor
Imagine you took his advice in 2018! Lol, you missed out on double appreciation of your house and locking in a basement bottom rate.
A credit card add was before this video those companies are wasting money
Henry lever action - Love your name... great rifles.
Lolllll
LET THEM BURN
Truth right here. As a Realtor, when I see people keep refinancing or home equity loans, it usually isn't long until the homeowners are in a heap of trouble. Thank you for your recommendation of Well seasoned Realtors who sell full time !
love that good ol' Appalachian temper!
You sell you’re house for $750k you buy the next for 850k lol
@daveramsey when you sell your house in a high market, should you rent until the market goes down? If you sell and buy in a high market are you gaining anything?
It really depends on the circumstance! What value is there when you sell your home "High" but then have to go pay a "High" rent to someone else. Remember that rent payments are just someone else's Mortgage payments that the renters are making while the owner gets the equity. If you are going to sell your house "High" then the solution is to buy a Duplex, Triplex, etc and let the renters of the other apartments pay the Mortgage as their rent. Then later, you can rent out the entire Duplex/Triplex, and go buy yourself a home on the "Low."
There are some that are a 10 year draw and then a 10 year payback. I personally keep mine open as a catastrophic fund only. Just because you have one does not mean that you're using it.
Yeah Kim, I was going to say-I read the terms of mine pretty closely and I didn't see anything about annual/bi annual calls.
True statement Kim! My wife was a 20+ year banker and said many people use it in that way. I think you have to be extremely Discipline person not to pull out the cash. I’m thinking about pulling some out to build a pool in the backyard. I know it will overall increase the value of my home while making the quality of life enjoyable as well. Life is short and that’s not to say you can be stupid but I feel you have to enjoy yourself sometimes and not be fear like Dave is ranting on.
HELOCs are generally tied to Prime or Libor plus a fixed margin.
So you shouldn't sell your house without a realtor because "you'll lose 3%", yet if you do sell your house using a realtor they'll take a 6% commission.......🤔
lol, i was thinking the same thing.
Of course. It's only stupid if someone else does it.
Yea. I should pay someone 60 grand to sell my 1 mill house. Nope. Ive bought and sold several homes with no realter
We have a small fixed rate home equity line that is actually at a slightly lower interest rate than our main mortgage but we are working at paying it off first at which point the money earmarked for that payoff will be applied to the mortgage.
Should be clear of the HELOC in a few months and hope to have the house totally paid in about 6 years so I can retire.
Lol. 2018 was the time to sell your house? This is 2022 laughing at you...
You're right, HELOC tends to be better in terms of the numbers. Either is a great strategy though. Once you get to that point, it's time to start looking into non-traditional financing (private money, business credit cards, etc).
that's what I am doing. But, instead of using the entire amount of my heloc, I am only using 20% of the property that I am purchasing and I am taking out the down payment out of my heloc and apply for a new investment loan. It works better on interest and not risking your house for the total amount.
@@williambella6293 thank you so much for the information, I have some more questions please
@@williambella6293 How can I connect with you I would like to pick your brain about a couple of things
I want to use a HELOC to pay down my mortgage. I will buy nothing with it and use the HELOC advance to chunk the mortgage. I put all my cash that I make to pay off the debt. I also have enough money put aside to pay it off if they call the loan.
has long as there is property tax .you will never own your hm. people are being taxed out of their homes.
Ron Mccullough very true Ron if You don't want that house don't pay the property tax see how long You have it so You really don't own anything
And if you rent,part of that pmnt goes to the landlords taxes
Anyone being "taxed out of their homes" bought more house then they could afford. There will always be property tax. Please stay on the sidelines complaining so you are out of my way, thanks.
Higher property/school tax means better location, better services and better schools..Much more desirable neighborhoods!
Tony J high property tax works as a social filter to keep the hood out
It depends on the interest rates what what you’re going to use the money for.
Thanks Dave, I am 71 and was considering getting equity release on my house now I have decided not to do it .
How can I use the 'Equity' in my home, (No mortgage), I am 80 years old, and no one to leave it too?
Vid title is HELOC, but the rant is against a loan. Two completely different things.
Yeah DR has shown a remarkably low understanding of REI. He's good at getting people out of debt, which is important. But that's it. His advice on investing is pretty bad.
If you sell now you have know where to go
5:00 I lost it when he says you financed a steak dinner over 30 years lol
I want an alarm clock with Dave Ramseys voice on it yelling at me to get up and just start going at me with financial jargon
OMG! I was looking for some real estate information and came across this awesome rant, I can’t stop laughing 😆.... But it’s the truth!
Not much of this rant is true.
Get your cabinets at Lowe's and save thousands. You can still have a new kitchen!
I wonder why Dave finds comfort in the fact that markets got to the same valuations as right before that last major crisis, without things being different except debt being much higher in all aspects of the economy? He, of all people, should know this is a problem.
Yep. Here we go again.
Wow Dave Ramsey has gone off the deep end. Helocs and home equity loans are different products yet he uses them interchangeably.
Because he's a POS with a 20 bedroom house.
Actually the rate is based on the Prime Rate, not some banker's whim
HELOC’s are crazy. I have worked for a bank and calling customers that own their home, but lose it cause of a HELOC. Or they have been paying on it for years and the principal never budges. Then they go into the repayment period and the monthly payment doubles and now they can’t afford it.
When I was almost done paying off my house the bank kept trying to get me to get home equity loan to remodel it. I passed
DR is talking about Home Equity Loan not Home equity line of credit - the title, they are two different things. Bait and switch.
Do you have an opinion about using a heloc to to pay down a mortgage and then depositing your income into the heloc to withdraw from like a checking account for bills or expense to take advantage of the average daily interest rate? Is this a viable way to pay down a mortgage quicker?
Not bad advice but calm down man. Save the judgement and share your knowledge with some decorum.
If you use the Heloc to buy more income producing assets. I don't see the issue.
Not the best advice on selling your home ASAP in this market. Where will you go? You'll waste your profits on overpaying for the next home.
You're exactly right cause you're paying cheap on the property tax on your existing home. Inflation rising so fast that retirees will never afford paying property tax on another future home. My advice keep your home but pull out credit for an income multi units rental property. Basically buy things that pay you even when you're sleeping or on vacation.
EastLakeWatch thanks for commenting on this. I hope Dave Ramsey reads these comments. I will likely not be going anywhere, but I did think of selling my house, living debt free and renting a house for a few years with someone until this bubble burns again.
I agree 100%
Actually the rate is based on how much you borrow your credit rating and your dti. It is always primes plus a margin so it is based on something. Most banks have a promo rate of prime minus a margin as well so they actually get a good rate. Also rate can be fixed so it can’t be changed whenever a bank wants to. Also if your info is false.
He’s just trying to put fear in people! You of course have to be responsible with any huge decision when it comes to your house. I’m planning on building a pool with a Heloc because I’m not a millionaire like Dave over here. The pool will increase my property value while providing fun in the sun ☀️ for me and my family.