Friends. I keep getting emails from my mortgage company offering a chance to pull from my 30k+ equity. How does that work? What happens if I try and cash it out?
In: Economics
Ignore your house. The mortgage company is offering you a loan of $30k at some rate of interest (maybe 8%, depending on a lot of things). You will pay back that loan over time along with interest. If you can use the loan to do something productive, say like paying off higher interest debt investing in a business then maybe it’s worth it. Also if you need the money for something you would otherwise borrow money for it can be a cheaper interest rate than alternative borrowing options..
The only time the house comes into play is if you don’t pay the loan back, then the person or company who owns your loan takes your house, called a foreclosure. From the mortgage company’s perspective this allows them to offer you a lower interest rate because of you don’t pay them back they can still recover their money.
But you are going to pay back the loan, so your house has nothing to do with it from your perspective.
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