- In this report
- Overview
- Clean up your credit score
- Keep your score blemish free
- Build a cash cushion
- Pay off your credit cards
- Rethink how you use credit
- Don't tap your home equity
- Make a bigger down payment
- Cap your debt
- Try to bulletproof your job
- Also in This Issue
This article was featured in the July 2009 issue of Consumer Reports magazine.
Don't tap your home equity
This article is the archived version of a report that appeared in July 2009 Consumer Reports magazine.
Home equity loans and lines of credit are tougher to get, and credit lines are being lowered or frozen. They're also more expensive despite plummeting interest rates. Historically, lines of credit have been linked to the prime rate (now 3.25 percent), but you probably won't get one for much under 5 percent right now, though they're cheaper in states with fewer foreclosures. Having a loan-to-value ratio of 80 percent or lower (and a 720 or higher FICO score) will make it easier to borrow against your house if you really need to.
Cash-out refinancings, where you borrow more than the amount of your current mortgage, are limited if available at all. As recently as last year people could extract up to $250,000 in a cash-out refinancing. This year the most you can expect is 60 percent of your home value or $100,000.
