Home equity line of credit = good investment?

Question

It says in this article on home equity line of credit

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that, "A 2005 study done by Harvard University shows that more than 80% of people over the age of 65 in USA own their own homes worth a total combined net worth of $3.95 Trillion.

This $3.95 Trillion is almost 1/3rd of all Senior's wealth in America. Home equity lines of credit allowed these seniors to own multile properties, as well as create additional monthly incomes. "

how does a home equity line of credit allow them to own multiple properties? it is coz of low interest on 2nd mortgages? or no interest? also, how does it help them make additional monthly incomes?

joetaxpayer · Accepted Answer

The site you quoted has an interest in promoting loans. The quote from the site may have been taken somewhat out of context, but either way; If one has the disposition to be a landlord, and is willing to take the risks associated with it, then these loans can be part of the equation. Buying at the right time (read that as "buying at a price so that the rent covers all expenses including repairs) and getting good tenants (read that as those who pay the agreed upon rent, and don't trash the place) well, then real estate can be quite profitable, as you will enjoy

100% of the appreciation (if even only the historic 3%/yr average) on only a 20% down payment. JOE

Rich Carreiro · Answer

Probably.  But more generally because it allows them to turn theequity in their home into cash.Same thing -- they can take $X of equity a month as cashby drawing on the line of credit.

PeterL · Answer

credit>When you are a certain age you don't want to put your money at risk orspend your golden years managing multiple properties.You borrow money to down pay another property.  The rental income paysthe mortgage, at least that's the theory.  It usually dosen't helpthem make additional monthly income.

Home equity line of credit = good investment?

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