It was August, 2007. I walked into the office at our business to find my husband and another well-dressed gentleman rifling through a fairly large stack of papers. Papers that required my signature. Because we were taking out a line of credit against the equity on our house. In order to finance the second franchise location.
It was, in hindsight, our point of no return.
They call them HELOCs. A word that rolled off many tongues a few years ago. Want that new car? Just borrow against your house. Need to consolidate some credit card debt? Sign on the dotted line. Feel like taking the fam on a great vacation? Just call the number at the bottom of your screen and someone will be waiting to assist you.
It’s amazing how many of us fell for it. Like equity was something concrete and measurable. You might wonder how the great and mighty HELOC played into the foreclosure crisis.
From our perspective, we may have been able to keep our house through our bankruptcy, had we not had the HELOC. Having more than one mortgage on your residence disqualifies you. So all those people out there who used the line of credit as a way of paying off multiple credit cards and then lost their income? Homeless. It seems unfair.
For those who took out a line of credit for vacation, um, I have a little less sympathy.
Back to August. I wish I could describe to you that feeling in the pit of my stomach, that no good would come of this. I wish I could tell you my husband had a full appreciation of what he was risking. I wish I could say I pulled him from that office and had a long talk with him. I wish I could tell you I didn’t, at that moment, feel blindsided.
If wishes were horses….
So what about you? Do you have a moment in your past that you look at and say, “if I hadn’t done __________, things would have been incredibly different.” Maybe it’s not a negative moment, but a positive one. And do you have any opinions about equity loans? Have you been burned by one?