Unformatted text preview: ow Rate Loans Home Equity Loans Also known as second mortgages Closed ended (home edition) Open end (line of credit) 401K Accounts The law allows you to borrow from your retirement savings and repay yourself interest 26 Home Equity Loans Credit capacity is a function of the home’s value less the mortgage outstanding; most lenders target 75% 85% of fair market value (FMV)
FMV of house $200,000
Loan capacity 80%
Less: Mortgage ($120,000)
27 Should I Borrow From a 401K?
401 – K
Tax deductible Home Equity No Yes Payback period 5 years 515 years If you quit Not due Due now Give up growth Yes No Double tax No Yes Source: The Road to Wealth, S. Orman 28 Build and Maintain Your Credit Rating Limit your borrowing to your capacity to repay Pay all bills promptly Check to see what is in your credit report Experian, Trans Union and Equifax Bureaus get information from banks, finance and credit card companies, merchants and other creditors 29 Free Credit Reports Fair and Accurate Reporting Act allows for free credit reports once a year Consumers will receive reports from Experian Transunion Equifax Log on to www...
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- Spring '14
- Debt, Credit card, MasterCard, Paul P. Gregg MSA CPA