Home Equity Loan or New Home?

A lot of people are scratching their heads about the current real estate market, in Dallas and around the country. People wonder: should I be trying to buy new North Dallas real estate or should I just get a home equity line and make improvements on my existing home?

It's not an easy question, and the right answer is not going to be the same for everyone. Of course if you hate the home you are in right now or do not currently own a home, now is a great time to look for a new homes North Dallas. Interest rates are not too high and there are a lot of sellers who are getting eager to sell. That means you can get a great deal on a Dallas new home.

On the other hand, if you really like where you are living, you'll want to think twice before you consider moving. You might not be able to find a house in as nice a location, in the same school district, or with all the amenities you want. In that case, if there are improvements you would like to make to the home that would make you a lot happier to live there, you could look into a home equity loan (assuming you have equity in your home) and leave the North Dallas real estate buying to others.

On the other hand, you might want to look into some investment real estate if you've got some extra money lying around and are happy with the home you now live in.

Using your home as collateral on a loan for home improvements is a good way to get a lot of cash at a decent interest rate. But, a word of warning: you are using your home as collateral, and defaulting on a home equity loan is still serious business, especially in parts of the country where home prices are actually falling (Texas is not one of those places, yet).

A recent article in the Dallas Morning News brought this point home by saying that, according to Moody's, the number of people who defaulted on home equity loans went up 11 percent for the quarter ending in April compared to the same time last year. Delinquent loans represent about seven percent of the pool of home equity loans, the investment service said.

The article reiterated that it is important not to use your home as an ATM. Also, be an informed consumer; before signing up for one of these loans make sure you are clear on the terms such as upfront costs, closing costs, fees, interest rates, balloon payments and other payments that might be included in your loan.

If you go into a loan with your eyes open, you don't have to turn into a stastistic. And if you decide what you want to do to your old home is more than you can afford even with a home equity loan, consider buying a North Dallas new home. Some people don't like the hassle of remodeling and now's a great time to find a gem for a great deal.