Is 72T bad idea at age 55 if only plan on 5 yr withdrawl

[Markola]

Here's what Dave Ramsey says about HELOCs, which is enough for me. YMMV:

http://www.thesimpledollar.com/the-t...home-mortgage/





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[pb4uski]

Quote:

Originally Posted by Markola Here's what Dave Ramsey says about HELOCs, which is enough for me. YMMV: The Total Money Makeover: Pay Off the Home Mortgage - The Simple Dollar Sent from my iPad using Early Retirement Forum

From the link:

Quote:

Think of it this way. You’re using your home equity loan as an emergency fund. You lose your job, so you take out $30,000 to live on – it’s fine, since you have tons of equity in your home, right? Well, the end of the year comes and you still don’t have a job. The bank says, “Sorry, we’re not renewing your loan,” and they call in the $30,000. You don’t have it. They repossess your house. Any equity you built up is gone.

A fundamental lack of knowledge of how HELOCs work... the bank cannot "call in the $30,000".

[gayl]

Quote:

Originally Posted by pb4uski From the link: A fundamental lack of knowledge of how HELOCs work... the bank cannot "call in the $30,000".

I'm surprised he made such a rookie mistake but you're right!

[jazz4cash]

Quote:

Originally Posted by pb4uski But you aren't getting it... there usually is not any right for a bank to call a HELOC... once they have funded the HELOC as long as you pay according to the contract there is nothing they can do to call/accelerate the loan, so I don't understand what the alleged "risk" is.

They may not be able to call the loan but they can and have cancelled borrowers ability to take additional draws against the equity if they believe the home value has declined. If this occurred when a borrower had an emergency the funds may not be available and that's the risk, I believe. If you had a very large % of equity available the risk would be reduced.


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