Why I Hate HELOCS (HOME EQUITY LINES OF CREDIT) - YouTube

Why I hate HELOCs, home equity lines of credit.  

Yeah, I'm using the word hate. I  am definitely using the word hate.  

But I don't hate anything so I'm gonna tell you  why I hate home equity lines of credit but why  

I hate them so you do not make the mistakes  that have caused me to hate them let's go.

I'm going to share with you the good, the bad, and  the ugly side of HELOC so that you know and you  

understand them very well. I'm going to share with  you the top 3 reasons that HELOCs are dangerous  

and what you should be aware of and last but not  least I'm gonna share with you the secret ways  

to fall in love with HELOCs so that you can make  some money fast. So, let's talk about what a HELOC  

is because many of you may not know, I'll quickly  explain. A HELOC is a home equity line of credit.  

This is where you can take a line of  credit against your home. It is very  

similar to a mortgage but it is not a fixed  amount. So, let me give you a quick example.  

Say, you have a house that's worth 100,000  and you do not have any mortgage on that home  

at all. You own the home free and clear. You could  get a home equity line of credit to access the  

equity that you have. Because you do not owe any  money on the property, you have equity. Meaning,  

you have value. There is a value that is being  untapped. There is this intangible value called  

equity that you can tap into. And so, what banks  will do is they will loan you money against the  

equity and you can use it very similar to a credit  card or a checking account. They'll give you an  

amount. Just using our example of 100,000-dollar  home that you own free and clear. They'll probably  

lend you 70 or 80 thousand dollars on that  property. So now, you have 70 or 80 thousand  

dollars that you can use to access to buy whatever  it is that you want. You could use it to buy  

another property. You could use it to pay your  bills. You could use it to pay the taxes on the  

home. You could use it to do a renovation on the  home. You could do basically whatever it is that  

you want it with the money so long as you continue  to make the payments and the loan is securitized  

by the property. Meaning, you are using your home  that you own free and clear as the collateral. So,  

again, a home equity line of credit is a type of  mortgage, okay? Just being very honest with you.  

It is a mortgage, it's a type of mortgage you're  borrowing against the equity in a property. Now,  

there's different types of home equity lines  of credit. Again, I am not here to sell you a  

home equity line of credit. You will have to go  to your local bank or your mortgage lender to  

see if you can qualify for a home equity line  of credit. But let me tell you some fun facts  

because this is why it matters. HELOCs are awesome  if you know what you're doing and they're terrible  

if you don't. So, let's get into that part.  So, before I get into all of the negative,  

like I said, I told you I would give you the good.  And there are some really really good things about  

home equity lines of credit. Like I said (1), you  can tap into the equity in a property. In many  

cases, you cannot just tap into the equity.  Many people will charge you a lot of money.  

They may charge you a very high-interest rate and  home equity lines of credit is a very easy way to  

tap into the equity. Two, they usually have very  low-interest rates. Meaning, they usually will  

only charge you 2 or 3 percent. Or they may have  what they call a rate plus a margin. Again, not  

going to get into this long thing. But again, very  similar to a credit card where they have the index  

that they're using and then they add a margin  to it. So, quick example. Say, the index is 2%  

and then they said we're going to charge you a 1%  margin then your rate is like 3%, okay? So, just  

a quick breakdown. But again, very low-interest  rates because what they usually base that HELOCs  

on the index that they base it on is usually like  the treasury bill or what CDs are going for. So,  

right now, the index rate is very low and then  the margins are just a little bit higher. So,  

you will end up with a very low-interest rate  on a HELOC in most cases, okay? The third thing,  

you can use HELOCs like a credit card almost. So,  like I said in the example, you have $100,000,  

they gave you an 80,000-dollar line of credit.  Now, you have $80,000, okay? You can do with this  

money whatever you want. You can take the whole  80 and just start spending it. Or you can have  

access to that 80 and spend it little by little  and just make payments. Similar to a credit card.  

So, if you have an 80,000-dollar line of credit  and you just use $20,000 of it, you only have to  

make payments on 20,000. You don't have to make  payments on 80,000. Additionally, you would have  

$60,000 that you could go back and use for other  things. So, it's an amazing way to tap into the  

equity. If you don't type into the equity in your  property, it's usually just sitting there and you  

want to do something with it if you can. Number  4, another awesome benefit of a HELOC is that they  

are usually very quick to get. It doesn't usually  take months and months to go through the process  

of a HELOC. It is not usually the same process  as an entire mortgage application or if you're  

buying a house for the first time where they're  just like running you through the wringer.  

Because it is based on the equity in the home and  your credit to a certain extent, it's usually a  

pretty simple process. Either you'll have a good  enough credit score to get it and you have the  

equity and it's a quick process to get approved  or you don't have enough equity you don't have the  

credit scores and you probably won't get approved.  But again, in any situation, it is really quick  

to get approved and to actually access the  money it does not take months and months. So,  

it is a fast way to access a quite a bit of  money depending on how much equity you have.  

And then the best reason and why I'm going to tell  you how to fall in love with them is some of the  

flexibility. This is also going to be a bad. The  flexibility of a HELOC is what makes them kind of  

amazing and one of the great benefits. Like I  said, you do not have to spend all of the line  

of credit. If you want it to use only 20,000  or 30,000 and then go get the other 50 or 60  

thousand dollars later, you can. Additionally,  it's a lot more money usually than a credit card  

so you can access it with just by writing a check  or using it as money most people don't see it  

any different. You don't have to actually swipe a  credit card. In most cases with a HELOC, they give  

you a checkbook and you can just write a check and  pay anybody using those checks. So, it's amazing.  

So, now let's get into why I hate HELOCs because  they are pretty hateable if you are not doing the  

right things. I told you all those amazing things  about HELOCs. And the truth is if you use them  

properly, they can be amazing. But here's why I  hate them. Here's what most people do with them.  

Most people do not get a HELOC and use it to  invest in real estate. Most people get a HELOC  

and they just spend it. They usually don't  even put that money back into the property.  

Like I said, I gave you suggestions of what you  could do with a home equity line of credit. But  

the problem is most people do not. Most people tap  into the equity in a property or in real estate  

and then they use that money to pay bills. That  is a disaster. I'm sorry. I do not suggest you  

tapping into your equity to start paying bills  especially bills that are going to be recurring  

and keep coming back. If you cannot afford  your bills or you cannot afford something,  

tapping into your equity to pay for it is not  going to be the solution. In fact, you're going  

to be putting yourself in a much worse situation.  And that is what so many people do. There's all of  

these ads and commercials where they're telling  people to tap into their equity and consolidate  

their credit card bills and pay off their debts.  And I absolutely hate that idea. I do not think  

you should ever do that with your home equity line  of credit in like 99% of the cases. What people  

do with the money is usually the problem. This  is equity, people; home equity line of credit.  

This is an intangible thing that you have, equity.  Meaning intangible money. Money that is not  

in your pocket. And a HELOC will allow you to tap  in and grab that equity and turn it into cash.  

Now, you have cash. So, what do most people do  with cash? They spend it. And that's why I hate  

them. You should never take your HELOC and spend  it. You either are going to invest it or don't  

even touch it. Bottom line. This is why I hate  them. People spend the money they don't invest it.  

If you're going to take the money and get more  real estate, income producing real estate,  

not just buy you another house that you're going  to live in. That's dead money, don't do that. But  

if you're going to buy a rental property you're  going to get your first Airbnb or you're going to  

renovate a property and then sell it, you  know, you're going to take that line of credit  

then renovate the property to bring the value  up what we call forced appreciation where you're  

forcing the value of the property to go up  and then sell it and recoup your money and  

then pay off that HELOC, absolutely. Do that.  That's what I would do. But taking the money,  

paying down debts, paying credit cards, paying  back taxes, whatever. Anything that's like a bill  

especially a reoccurring bill, do not spend your  HELOC doing that. Don't fall for it. Don't use  

it for debt consolidation. And 99% of the times.  Again, there's no absolutes. But in most cases,  

that is not what you want to do with your HELOC  so don't do it. So, let me tell you now how I  

make money with HELOCs. Like I said, I got a home  equity line of credit the first time and it was  

amazing. And what did I do? I turned that home  equity line of credit into rental properties,  

okay? I made an entire video that teaches you how  to get properties for pennies on the dollar. I'm  

not talking about finding a real estate agent  and driving around and finding that house,  

you know, that's the perfect rental property. I'm  talking about targeting people that are having an  

issue with their real estate. For example,  they're behind on their mortgage payments  

and they'll gladly let you take over those  payments and get that property from them. Now, you  

use your home equity line of credit and not only  did you get a house at a discounted price. Now you  

have an actual asset, okay? So, if you're going to  use your home equity line of credit to buy assets,  

then absolutely. That is what I do with a home  equity line of credit. Because again, you're  

using your equity. This is something you've built  up. This is something you've done and you don't  

want to just squander that money just because  it's not real and someone gave you access to it.  

They gave you access to your equity, your money.  Invest it wisely. The property that you took the  

equity out of is an investment. That's why you're  taking the equity out of it. It was an investment  

for you. So, the only thing you should do is make  more investments. Don't use it to go on vacation,  

don't use it to pay off bills. Use it to get more  rental properties or possibly fund your business  

depending on if you vetted the id and you're  really going to make money with it. So, I have  

written an entire book that teaches you all of  this and more and you can get this book absolutely  

free. Go to noellesfreebook.com. That's noelle  (n-o-e-l-l-e-s), free (f-r-e-e), book (b-o-o-k),  

".com". I have poured my heart into writing this  book teaching you exactly how I went from broke  

in my parents basement to a multi-millionaire with  over 8 streams of revenue right now that makes me  

millions of dollars per year. And I am now giving  it away to you absolutely free. I want to make  

sure that you read this book that is inexpensive  and it's a great way for you to get the knowledge  

the information and the resources that you need  to be successful. This is Noelle. To your success.