Addicted to debt? Don't count on a HELOC fix
Posted
Feb 28 2008, 03:59 PM
by
Karen Datko
Rating:
If your lifestyle is dependent on a home-equity line of credit, your spending may be in for a sudden adjustment. Lenders are lowering or cutting off access to HELOCs, particularly in areas where property values are declining. Blogger Mighty Bargain Hunter has an opinion about that.
"Since trying to borrow your way to prosperity doesn't work," MBH writes, "I'm very glad to see this happening."
He blames lenders for giving people "more rope than they really need to hang themselves" and borrowers for taking "the bait." Using a HELOC to pay for a lifestyle is just like using a credit card and carrying a balance, MBH adds, "except for the small fact that the bank can repossess your house if you can't pay this one back."
Now that easy money is becoming a thing of the past, people need a reality check on their spending. He writes, "Just like it's wise for a fat person to stay away from candy, it's wise for someone addicted to debt to stay away from credit. If banks are taking away the credit, so much the better."
