Cell: 604-855-2521 |

Don’t Turn Your Home into an ATM

I am sure you have heard about Secured Lines of Credit. If not here is a quick explanation.

Let's assume that you own a house that has an appraised value of $300,000 but you still owe $200,000 on your first mortgage. That means that you have $100,000 in equity.
Based on this information most banks will issue you up to a $65,000 line of credit with the interest rates as low as prime+1. That would be secured by the second mortgage on the title of the property. I know this sounds really good.
I know that it would allow you to go for that dream vacation or to buy that car you always wanted...but watch out. It is really easy to spend the equity you worked so hard to create.

These secured lines of credit were originally designed for two reasons;
1. For emergencies.
2. To help us to increase the value of the property like renovations, additions and remodeling. Meaning take one dollar out and give yourself $1.25 back.
They were not created to decrease the value of your property, and that is exactly what will eventually happen if you are not careful.

Lately I have seen many families using their homes as a personal ATM’s.
For real life examples we don’t need to look very far.
In the past few years our neighbors south of the border had a number of options to extract valuable equity out of their homes (Like subprime mortgages) to buy boats, SUV's and expensive trips, and look what happened to their Real Estate values.

So be cautious with the equity of your home. It is much easier to spend then to create!

Your Realtor For Life!


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What is a pre-sale?

Example scenario: When the developer intends to build an apartment building and applies for financing, the bank will grant financing under certain conditions. One of them will likely be a certain percentage of pre-sales the developer will need to secure before receiving the funds.
It is common practice for a developer to approach several real estate investors and offer them an opportunity to purchase units of the non-existent building at a discounted price, and on good terms.

Once the number of pre-sales is accomplished, the developer goes ahead with the construction, which will likely take two years or longer to complete. During construction, their marketing team offers the remainder of the units for sale at market value to the public.

If you are a RE investor, you know that it is preferable to be buying at the pre-sale prices, not market value prices.

The question is, how do you get the invitation to buy a pre-sale?
In the past many years, investors have made substantial income by buying at wholesale prices and selling at retail prices even before they needed to complete their purchase. I saw many of them lining up and sometimes even camping overnight in front of the sales center to get a chance to buy at lower prices, but not everyone was lucky enough. You needed to be well-connected to get an opportunity, and you had to act fast.

Today is a bit of a different story. Several projects in the Lower Mainland and Fraser Valley offer really good prices and incentives to secure a unit now and complete the purchase two or three years later. The list of incentives varies from one project to the next. Besides attractive prices, you can get low deposit amounts (5-15%), low or no assignment fees, free updates, a mortgage rate buy-down program, extra parking and more.

A month ago, I helped a few of my clients purchase a presale in Surrey that sold out in 2 days, and I know of another good developer that will be offering a few units for sale as well.

If you would like to know more about these opportunities, I would encourage you to call or email me, and I’ll be happy to send you details on those projects.
Kind regards,
Tibor Bogdan
Century 21 Creekside Realty Ltd.
45428 Luckakuck Way #190, Chilliwack, BC V2R 3S9
cell: 604-855-2521
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