Everyone Needs A HELOC? 

Looking to learn more? Check out these related articles from Ramsey: HELOC: What Is a Home Equity Line of Credit? - bit.ly/RamseyHELOC 10 Money Traps to Avoid - bit.ly/RamseyMoneyTrapsToAvoid How to Create a Home Renovation Budget - bit.ly/RamseyHomeRenoBudget

Biggest lesson i learnt in 2023 in the stock market is that nobody knows what is going to happen next, so practice some humility and low a strategy with a long term edge.

5:30 "An emergency fund turns a crisis into an inconvenience." So true.

Our HELOC felt like a boat anchor… Paid it off several years ago and I will never ever do it again.

Main sewer line to my house needed replacing within the first few months of buying a house. It was $8k, but thanks to a good ole fashioned emergency fund, I just wrote the check. It was annoying, but the annoyance wore off very quickly since I wasn't making payments.

Yes, "HELOC" is just a nice, sanitized, friendly term for a second mortgage. It's kinda like calling a plane crash "An aerial vehicle ground incursion."

We’re using our HELOC to consolidate debt and pay it off faster with a lower interest rate. The position we’re in now, we’re in about 20k debt including student loans, behind on bills and struggling to save…a HELOC is our way out from underneath it all. The payment for the HELOC is about 1/8 of what we pay individually on our debts each month…

I disagree with the insurance sending you money right away. I was in a hurricane and my roof got damaged. It took them a while to come and see what was wrong; one can't wait with a damaged roof when it keeps raining.

I like Jade - you both work well together and have chemistry… keep it up.

Actually I have had one for 3 years. Never put more on it than I could pay off with cash. It is an powerful tool you can use to play off your mortgage fast. When you use it correctly it works

In the process of getting a HELOC. Thanks for the insight however. Loans = keep you in debt forever. This is what the banks want. Heloc isn't for everyone, but it can work and is far better to get this 'mortgage' then a loan.

Many people use a HELOC in place of an emergency fund, which is not advised. FYI, you will inevitably experience emergencies. You definitely don't want to pay interest on an emergency expense.

I personally think, HELOC especially if used and utilized correctly can be to your advantage, my parents for example, when building our home used all HELOC to build our home. All in all. Put in about million towards the home and now it’s assessed at 3 million, with the basement suites rented out. Another example is, they bought a rental and they were short on the down payment so they used 70k out of a heloc to get the down payment. Purchase price for that property was 800. Now also assessed at 1.4. I think HELOC for the majority of people is horrible. This is also when interest rates were really low and they locked it in. They only pay 1.75% for their heloc. And they paid down most of it, as they always put more than the monthly amount as they want to aggressively pay it off.

Jade is BY FAR my favorite of the new personalities you're trying out!

Wait so I get to pay interest on my mortgage and once I have gained equity on my home and I can take it back out in a loan and pay a worse interest rate on it again? Where do I sign

My advisor told me the same thing, get a heloc just in case. I refuse and decided to save at a gazelle pace.

A HELOC I never used with a bank that no longer exists (GMAC) on a house that has been paid off for years had a lien on my home I only found out about when I tried to sell. I had to put up over $90k in escrow to cover a non loan to close the sale and then wait until this mess got sorted out.

You are putting your house on the line. That's where we need to draw a line and Not take one out! Thanks for the information.

Looking at a heloc through one lense, you’re correct that would dig a deeper hole. But there’s a use for a heloc and that is to dig you out of debt

I’ve been in construction and maintenance for many years. For those of us who are handy and know what you’re doing I just used bonuses and extra money that came in and used it to purchase materials for home improvements. No loans, no contractors. Pulled any necessary permits. Sweat equity. If I decided I wanted to add on I’ll save up for it. I can’t believe people would borrow money for a yard.

Jade and Dave sarcasm multiplying off each other 🤣

Dave reminds me of my stubborn old parents. He knows of only one way to do things and then thinks there's absolutely no other way to be creative. He probably still writes out a check at the grocery store because it's the only method he knows that works. Iv seen a lot of people jump start their real estate empire or business with a heloc and became multi millionaires. He's the definition of closed minded and unable to think outside of the box. I bet he doesn't practice most of the stuff he teaches. But teaches what sells.

I wish I knew about the heloc many years ago. I didn't do I took out a home equity loan to do the necessary kitchen repairs. Then I lost my job right after.

I am glad I found Dave Ramsey in youtube before buying a house. The baby steps is now my financial guidance.

Well, glad to see Howard Stern paved the way for Dave’s approach 😢

I have two home equity loans at 5.9% that are FIXED for 10 years

I used a heloc in a crisis of loosing a job and paid interest only instead of principal and interest and I got thru the crisis. He’s wrong

Yep I paid a downpayment for a rental property 15 years ago from my HELOC, paid it off ASAP and now own the rental free and clear. Clearly a bad choice?!

Her confidence is refreshing compared to everybody else other than Rachel walking around on egg shells around dave

A HELOC can work if you know exactly what you're doing.

You can use HELOC to buy and flip a home. Make a ton of money and put back the LOC money you used.

We need jade and Ramsey collab more . They are in synch. Great collab

When I redid my kitchen and the floor, I paid cash. Because I think it’s very weird to borrow money for home upgrade.

Two of my friends have used this. I am not sure if this benefited them. I am curious to ask, but don’t want to ask about money.

Nothing wrong with HELOC. I have a 50k one with fixed rate. I carry a zero balance but it's there if I need it. I will most likely use it for my next rental property down payment. It's a great tool to have in your tool box. If your not smart with money then just stay away from it.

HELOC = Paying the bank interest to borrow your own money.

I opted to get a HELOC, only used it twice so far for home repairs. So far no issues, pay it off monthly or whenever I feel like it. I would not suggest using it as an emergency fund. You should have an actual emergency fund as an emergency fund.

You can get a fixed rate HELOC. Don't use it for simple home improvements or expensive trips. Use it for things that exceed your emergency fund. Like say your insurance is paying for a new roof, but you want to pay the 15k difference to get a steel roof that will never need to be replaced. Be smart with it and you will be fine.

Any kind of money is bad and can be good. Depends on how you use it. If you are using it for something thT will build cashflow on short term, yes, but never use them for home development nor want purchases

I didn't even know what a HELOC was until I started watching clips from this show.

Using a HELOC badly is using your home's equity AGAINST you.

1:30 "At what cost?" Sounds like no one knows until the banker picks a number for the day.

This is what drives me nuts about Ramsey - he speaks about a HELOC as if the only recourse is to pay off debt. Many people use it to pay for upgrades to their house they could not otherwise afford. If you are doing renovations that potentially increase the value of your house, a HELOC *might* be a wise investment if the only other option is a loan or credit card. Speaking to the pros & cons of that would have been a much better use of time.

I agree with everything except 1 thing. Show me an insurance company that would actually help you when you have storm damage because they dont exist. They take forever. They evaluate every angle and clause in there contract to weasel out of payment. Theres an entire industry of lawyers that continually sue insurance companies so they will pay what is due. Honestly its so bad i kinda wish the insurance industry just didn't exits. I have never personally met anyone where an insurance company actually helped them in there time of need. Although i know there out there and probably will reply to this comment. But imo.. even though i pay it. And im in no way telling or advocating anyone cancel any insurance the have. I just think insurance is the biggest absolute worse use of money. Period. Even worse than loans you always freak out about. At least when you pay interest you get something out of it. And yes.. in a true emergency you might be glad you had insurance. If they bother helping you. Last year i had storm damage at my house. I had luckily before and after shots. Our storm made national news. Etc. There was no reasonable way anyone would look at my house and not conclude it was storm damage. And yep. Insurance denied the claim. I actually would have used one of those lawyers but its just not enough to bother. It wasnt a high dollar repair. Emergency fund to the rescue.

We Inherited a home with a HELOC. We have been paying on it like crazy, and getting close, but just paying the minimums will take 30 years to pay it off. It like 90% of the payment goes to interest. The interesting thing is they can call the note on these loans at any time, even if you are not behind on your payments. The were trying to get us to put the HELOC in our name, but our attorney said we don't have to. The have to honor the loan from the immediate family member that inherits the home.

5 minutes of criticism, 2 minutes somewhat informative. The co-host is an echo of Mr.Ramsey, which is kind of annoying. Can you just be informative without being a dush?

This is actually not true. They're typically indexed to prime rate. (ex. prime+1% or Prime+2%) They can't just jack it up 10% because they feel like it. Some banks also offer Fixed HELOC options where you rate stays the same and will not fluctuate at all.

My mother is 81 And still paying off her HELOC

I took out a HELOC years ago. Didn’t really need it but I thought I might need it. Well the value of my house dropped and the bank sent me a notice that I couldn’t use the HELOC. So I paid fees to take it out, then never got to use it. Waste

Learned a lot thank you Dave.

I love Jade!!!! Great collab with Dave ❤🎉

Unfortunately I got one but I’m paying it off once house is paid off, mine is fixed not variable though

HELOC = Home Equity Line of Craziness

a significant decline in home values could cause your lender to reduce your line or freeze it - as some homeowners learned during the Great Recession.

One can get rich using HELOCS to buy and rent out properties.

They can be fixed rate or variable. I agree that variable is very dangerous.

But cant you use an HELOC to pay off your monthly bills and put the rest of your income into your mortgage to pay it off faster? That way you pay off the much bigger loan and only have to worry about the small one

I have 60k worth of credit cards which i never use i will use if i m dying kind of emergency to save myself from that trouble and pay back in 30 days if i assume i cant pay in 30 days i might choosing death over credit card usage

Glad they explained to Jade what a heloc is before the episode

Yep! I have $102k in equity and I refuse to touch it!!!

I have a fixed rate HELOC @ 2.70 percent. You can take a lump sum out in a fixed rate. I still have this money and am earning 5 percent interest on it (still below inflation). I am waiting for a huge down turn in the market (20-30 percent). I get this is math and this is not the kind of behavior to earn wealth. Assuming I wait for a 20-30% correction, i don't see the problem with dumping into bonds and s&p index as i can afford the monthly payments and have an emergency fund and am already saving for retirement.

Lol love the "SHELOC" at the end there. People get triggered like crazy these days with comments like that.

I want to sell my home(mortgage free,fully paid off) to buy a bigger home outside the major city i live in. Me and my partner want to start a family so we need a bigger home and right now in the market there's less competition so it seems like its a better time to buy. Spoke withe 2 mortgage brokers. One said to get HELOC and LOC to pay for new home. The other broker said just HELOC and the rest pay with cash. I have the cash in the bank, plus extra. Im not shy on cash. Homes near my current home are taking a month max to be sold, according to listings. I want to go with just LOC but im no expert. Any thoughts or guidance? Current home value $1.2mil, new home $1.2mil.

Its not a crisis if you have the money to pay it off with cash but do not want to use all your saving and be left with nothing.

0:44 This is the scariest thing I've ever heard. I'm not saying to not leverage debt if you know what you are doing... but if you know what you are doing you NEVER get a loan with variable interest rates, especially one that you can't track how it's calculated.

So Dave says stay in debt longer instead of using a Heloc for the right purpose. And getting out of debt faster.

Loan and line of credit are not the same. A home equity line credit (HELOC) is not a mortgage, Dave is 100% wrong on this. A a home equity loan is a mortgage. A HELOC works like a credit card, you only owe what you spend on it. You can treat it like a checking account by automatically adding your income into it, this is the greatest benefit of a HELOC because when your income is deposited it counts as a payment. You can't do that on a mortgage. Additionally you can withdraw cash and pay other bills on a HELOC. The interest on a HELOC is calculated as the average daily balance * the interest rate divided by 365. This is not a scam, this is a legitimate way that people pay their mortgages off. You can literally decrease your mortgage by tens of thousands of dollars over a few months. A mortgage will not let you do that because you pay all the interest upfront.

Its not leveraged. It's a stupid loan. I'll never use it because I have an emergency fund.

If your home is all paid off...it makes sense.

Don’t use a heloc to fix your home use it to add passive income and put your equity to work , you only pay interest on what you use but it’s goo bro have instant access to your equity to buy an asset in a instant

Arent you required to take out a large chunk of money for a fee just by opening the heloc at all?

I have an older home and all updates have been slow, but it’s getting done

Dave definitely doesn't live in Florida if he thinks insurance companies are ethical when it come to paying for storm damage repairs. LOL

I have been proposing that they give the more masculine sounding words a feminine twist. Shelock is a good one, my personal favorite would be heroids.

The only thing worth using this "heloc" loan for is transferring your student loan into it, but you still have to pay despite the interest rate changes it should be less than the student loan interest rate.

5:54 - In other words, you're BAAA-ROQUE!!

Some people can not save up for emergency. When they raise kids, the money goes so fast and nothing is left.

I never understood why is the bank loaning homeowners their own money? Mr Bank why do I have to pay you interest on “ MY equity” key words “my equity”

Everytime people take out money from a HELOC people think your wealthy and they don't even know what payments you are paying 😂

I never understood the idea of using a home equity loan. So I'm getting a loan for the equity in my home...so your charging me for MY homes value? That seems stupid.

I am reading a contract for a HELOC and one thing I noticed it says that they want me to waive my right of homestead exemption, statutory, and other rights of redemption of, including the right of redemption pursuant to Ark. Code Ann 18-49-106 and marshaling of the property and all right of appraisement of the property. Borrower also relinquishes all rights of curtesy and dower in the property. I think that’s a lot to give up rights to for a < $20,000 line of credit. I already have more than this, but it’s invested. I didn’t want to take it out. What do you think about this?

What if I use a HELOC to improve my house then sell it?

When I watch TV shows like breaking bad, all I keep thinking is, "this guy should of had an emergency fund."

He lock me in. Heloc 😊

But what if I'm not using the hello to update my home? What if I'm using it to pay off big chunks of my mortgage? Does the interest accrue differently?

What about a shared equilty agreement in a divorce buyout?

Well i understood what they saying but if i have an emergency, dont have an emergency fund because you dont make that money and dont have the time to work 3 jobs cause you got kids....you do what you got to do. They seem so out of touch with the reality because they make so much money. Insurance companies are not in a hurry to spend money. Yeah we all dont have Ramsey money.

Any tips on how to deal with home insurance companies? We have a home owner insurance that's been trying to low ball us on tree damage to our home.

They most likely refinanced in 2021 not a heloc

We had an emergency situation where we unexpectedly had to get our roof replaced and the damage was not coverable by insurance. We had to finance the project, and the finance company the roofing contractor uses (Foundation Finance) is charging over 11% interest on the loan. What is our best option for borrowing elsewhere at a lower rate to get rid of this 11+% loan in exchange for a lower rate as we strive to pay this thing off as soon as possible?

I'm confused on what's going on in this video and in the comments. Are people confusing HELOC with Home Equity Loan? HELOC is more like a credit card. So the same principle applies. A credit isn't for everyone, so you shouldn't use credit if that is something you struggle with.

Pretty sure BMW and Mercedes would go out of business if people stopped using HELOCs.

HELOCs are great in case of emergency only in addition to an emergency fund.

Ever get the feeling "Home equity line of credit" it was turned into an acronym word just so folks would be one tiny step away from having to keep hearing and saying the word "credit?" Even the most financially illiterate/ignorant/lazy know that credit and debt walk hand in hand.

Meh, I used a HELOC to build a garage with an apartment above it. But I had the money. I just didn't want to burn through any cash at that time. It was at 2.5% fixed and it took me five years to pay back. This was a while ago though. It worked out well. My teenaged daughter lives in it now. She comes down and helps me work on my cars when she hears me cursing. Worth every penny to me. I think people watch theses home shows too much and get a little too stupid with HELOC'S. They can't work if you are financially responsible. Most people aren't.

Emergency funds are a nice way of saying you don't want to commit to paying against principle.. Saving money without commitment to your debts is goofish. Like a dollar waiting on a dime.

There are times and places for HELOCs. In lieu of savings for ongoing living expenses is not one of them.

I enjoy the Ramsey Show, but the intersection of snark and sarcasm makes this my least favorite hosting combination.

you can have a fixed rate HELOC. I do

Debt is your friend ….. NOT