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Home Equity
Mortgage
Equity Line of Credit Foreclosure

Every time you get an equity line of credit on your home you should think carefully about the possibility of foreclosure.

Even though it is not a mortgage a home equity line of credit could lead to foreclosure on your home. This can occur because using an equity line of credit is still borrowing money against your home. If you can’t pay it back the lender still had the power to foreclose on your property.

Equity line of credit foreclosure means that the lender takes possession of your home, throws you out and puts it up for sale. Many people have lost their homes because they took out equity lines of credit that they couldn’t or wouldn’t pay off.

Avoiding Equity Line of Credit Foreclosure

The way to avoid equity line of credit foreclosure is obvious you should not use a home equity line of credit if you can’t pay it back. Only take out an equity line of credit if you know that you will have the income to pay it back in the future.

If you don’t think you’ll be able to pay off an equity line of credit don’t use it. Most people who end up facing equity line of credit foreclosure got there by abusing equity lines of credit.

Try not to use equity lines of credit like credit cards. This means you shouldn’t use equity lines of credit to pay for luxury items, cars, consumer goods or everyday expenses like groceries. Nor should you use equity lines of credit to pay off credit cards and other consumer debts.

Remember that when you use an equity line of credit you are borrowing against your home. As with a credit card it is very easy to end up spending an amount that exceeds your ability to repay.

Pay Attention to Your Spending

Always pay close attention to the amount of the equity line of credit that you are using. Ignoring the way you use your line of credit can let your spending out of control. This could quickly lead to overspending and foreclosure.

Obviously this means that you should budget your spending. A good way to do this is to only spend what you make. If your level of spending doesn’t exceed your income you won’t have to worry about debt or foreclosure.

Use Home Equity Lines of Credit Sparingly 

One of the best ways to avoid equity line of credit foreclosure is to only use equity lines of credit for certain expenditures. Only use the equity line of credit for emergency situations like medical expenses or home repairs if possible. Or to cover unforeseen business or home related costs. Don’t use the equity line of credit to cover day to day expenses.

Another good rule of thumb is to only use your line of credit to cover home related expenses such as repairs or remodeling. Restricting how you use your credit can enable you to avoid equity line of credit foreclosure.