Hi Kelton, Ok, so you do you suggest that most people would be best off keeping a mortgage with as little equity as possible? (and would you suggest that *I* go get this house refinanced? First of, equity is equity is equity... real estate is only one place to keep your equity. You can move your money from your left pocket to your right pocket, and you still have the same amount of money. Keep ALL of it in your baseball cap, and a strong wind might take it ALL away. As for what I would "suggest".... A) I *really* simply suggest making sure you are fully informed from which to make your decisions. Constantly be on the alert to avoid making uninformed or fear/greed/emotional-based decisions when you can avoid doing so. B) Real estate is ONE of your "pockets" where you can keep your money. Be fully forewarned & fore-armed as to the real risks of doing so (financial risks,) and whether there are really any upsides (financial upsides) in doing it on an incremental basis. C) After doing your BEST to fully inform yourself with solid financial knowledge... *THEN* do a "gut check" and go internal to make your emotional decisions. Ultimately ALL decisions are emotional... this much I believe we can all agree to. I just hope for you that you start from your highest knowledge level and THEN filter down to the base emotional levels. So in keeping money "untouchable", what are some examples of these kinds of investments? Would putting my parent's name (or someone else's name)on my accounts help? ... or are these "safe havens" going to require an attorney? Before being overly concerned about whether you'll need an attorney or not, keep pushing aside your emotional assumptions (as you are EXACTLY doing right now, as you keep "coming back to the well" for more info... fully in spite of self-accusing yourself of ignorance (which is not at all appropriate. Ignorant people have no concern for knowledge... you are far from ignorant!)) Ask yourself "how much of my personal net worth can I emotionally sustain a loss of if I keep it in my home, and the home either loses value, or is attacked by the "SLAP" risks Dave detailed out?" Whatever that amount is that you can sleep at night with the awareness of risk of loss, leave THAT much equity entrapped in your home, and PLAN TO move the rest out with a cashout refinance. DO NOT REFINANCE, however, until AFTER you become comfortable with your selection(s) of how and where you will employ that same amount of equity... *AND* until you have an ongoing plan in place to continue to BUILD your total equity, aside from your real estate, so that you CAN finally pay the entire mortgage off safely "with the stroke of a check" when your financial independence day arrives! Realize that all growth vehicles are not designed the same... neither in terms of expected returns, risks of loss, legal liability shelter, nor tax treatment. There are some growth vehicles that behave better in some areas, but there is always a trade-off in the other areas as well. A good fee-based, or fee-only, financial planner who is well versed in the financial realm known as "home equity and safe growth management" is what I would probably recommend to you to help you begin to understand and plan out how to use various instruments both in the present, and on a planned-out basis as you proceed into the future. Such advisors don't usually cost too much (though hourly may look pricy,) but the results are the difference between a safe retirement and not. You say that you are repeating yourself, but this is all news to me! Please pardon my appearing exasperated... I am definitely not that. I do hope this is all helpful... both for you, and for the various folks who read voyeuristically with eyes wide-open and jaws on the floor (and even those who think "they know better" and snicker scornfully ;~) Cheers, Dave Donhoff Strategic Equity & Leverage Planner

If you start from owning your home free and clear, you own 100% of your home, no one is going to have a claim on it. If you own 50%, taking out a loan, with guaranteed requirement to pay interest on the loan, you have your neck stuck out quite a bit ... what did you do with the money? Buy consumer stuff? That way, you're eating now - and paying later ... plus paying fees on the future(?) income not yet received, with no outside income to help cover it. And no extra assets to maybe produce income, maybe grow some. Not my cup of tea. If you use the money to invest, neck stuck out some. You have guaranteed requirement to pay interest on the loan. You have some extra assets, whose value may grow - may shrink. If your investments produce some income, that can pay part of, or even all of the cost of the loan (net of tax considerations). If you plan to take out a mortgage for, say 1/4 of its value, neck stuck out less far ... what do you plan to do with the money? Invest it in a bank account or Money Market instrument, that usually pay at a low rate, to obtain the peace of mind of knowing that you can cover an emergency need? How about taking out a HELOC, say for $20,000. if that's the amount that you'd like available for emergency ... but it may be that there'll be set-up fees. Then not using it till there's an emergency. Will there be fees asociated with letting it lie unused? Plus, how about holding a no-fee regular credit card, planning to use it for immediate emergency, then drawing on the HELOC to pay off the credit card debt before due date, in order to avoid their high interest rates - thus deferring the date at which interest starts on the HELOC, and carrying it at a modest rate? No interest to pay to anyone, or worries about differential rates, until you have an emergency. Interest cost not deductible, though, I expect. If your regular card has a low limit, can you feel comfortable with that until they increase it, as they usually do after a time? If so - there's the HELOC available to draw on immediately (paying interest from that date), or you can take out a second card. *Never* let that/those higher-limit card(s) out of your sight - even to give to waiter at a restaurant, for internet purchases, etc. - carry a card with a very low limit for such uses. If there are (substantial?) fees associated with setting up a HELOC, what about taking a mortgage (comparable set-up fees? deductible interest, for next ninety days - your suggestion?) for, say $50,000., then either investing mainly in quality equities, aiming at leaving the mortgage running for a substantial time, giving a long enough period to allow for the equities to appreciate over time, despite short-term fluctuations. When using the mortgage to purchase income-producing investments, interest is usually deductible, I think - you need to check it. Using a HELOC for investments, you may well be able to arrange to pay interest only on a regular basis, with option to pay down principal as you choose; using a mortgage won't give you that option, so you'll have much higher ongoing payments liability. If you invest in equity-based mutual funds, the market historically has average growth of about 8%, and U.S. mutual fund managers usually charge about 1.5%, I think - about 18% of your anticipated growth rate ... and they get theirs annually, whether the market goes up, down, or sideways. Perhaps buy Exchange Traded Funds, which buy various components of the whole market, but managers charge much lower ongoing fees. Very few fund managers manage to out-perform the market, long term. On the other hand, with about $60,000. to invest in total, you could buy stocks directly, in various market segments, countries, probably 6 - 10 to a dozen or so, more or less building your own mutual fund - and avoiding their substantial ongoing fees (pocketing them instead). And if your rate of appreciation is slightly lower than that of the fund managers - you're not paying their guaranteed fees, either. Use the original $50,000. to buy stocks or equity mutual funds (with some bonds, etc. if you'd feel more comfortable, but those dollars don't grow if left to maturity, and inflation erodes the value of each dollar annually). Using your $50,000. invested using the mortgage/HELOC money in those mutual funds, ETFs, bonds and stocks as underlying security, open an LOC for $20,000.00. I think that you'll find that the lender is willing to lend $50.00 on $100.00 of underlying collateral. I took out a fully secured LOC a few years ago, covered by stock and mutual fund certificates, with no set-up fees. There are no fees associated with carrying it unused, either. You may be able to arrange such - check, of course. Using a LOC for $20,000., should your $48,000.+ (net of commissions) asset, supporting a LOC of up to $24,000.00, drop in value by about 15%, you would still have value to cover your $20,000. LOC if it were fully drawn, but no problem, as it is lying there unused, ready to cover you in case of emergency. However - if there's a further drop in the market (which sometimes happens - up to 25% or so), if your LOC is fully drawn, your lenders are going to want more cash or collateral - like, today, or tomorrow at the latest. That is - *only if* you are using the full amount of your LOC at the time! Otherwise, you're covered in case of a deeper market drop. Suppose you use $10,000. of the LOC to buy more equities, leaving you with only $10,000. unused portion of your LOC? With about $58,000. in assets underlying the LOC, if the market drops by slightly over 25%, you are still covered for the full amount of the LOC - which is usually only drawn to $10,000., except when in use for emergencies. And there is back-up of the credit card(s) that can be used, even if one needs to carry a balance at higher interest rate for a while until there is some free room again in the LOC when markets recover. Those $48,000. - 58,000. in assets will produce some income which you'll need - plus other ongoing money - to cover the costs of the interest and principal on the mortgage and interest on the HELOC (or portion thereof) when in use. As the value of the stocks increase over time, the amount of the dividends will usually increase slowly, resulting in a reduction in the funds required from your ongoing income. Also - the amounts that you are required to repay are precisely the amounts that you borrowed in the first place (apart from the rent on the money). That, so long as inflation is with us (as it has been since the Dirty Thirties) you'll be repaying in deflated-value dollars. The guy/gal who puts his/her money in the bank in guaranteed-value dollars loses to inflation ... while the guy/gal who borrowed them, paying back precisely the amount that s/he borrowed ... gains. At about 2% annual rate, currently, isn't it? Good wishes for making a decision that you're happy with, long term. ole joyful

I don't think you need to do anything right now. If the house sells at a satisfactory price, then both the first mortgage and the equity loan balance will be paid off at the closing, and the balance (minus agent's commission, if your using one) will go to you. You definitely should NOT pay off the loan with your savings. That cash provides you with financial flexbility that you will lose if you pay off the loan. A recent widow should hang on to her cash reserves until life settles down and her financial situation becomes more certain. If the equity loan is a HELOC with a floating interest rate and the house doesn't sell by the end of the summer season, you probably should do a refinance and combine both loans into one so that you don't have to worry about the possibility of rising interest rates inflating the size of the HELOC payments.

Yes, a home equity loan and a second mortgage are practically the same thing. You will see lenders using both terms. Technically, a home equity loan would not have to be a second mortgage. For example, if you owned your house free and clear (no mortgage), a loan against it wouldn't be a second mortgage, but would be a first mortgage. But the key point to remember is that whichever term they use, they are placing a lien against your home which is securing the loan. The best place to shop for this type of loan is at financial institutions where you currently do business or that are known to you. The first place to check is the mortgage company that holds your first mortgage. They often offer good deal to current customers. That's not to say that some of the lenders who advertise for customers aren't offering good deals -- some are -- but you have to look especially carefully at the closing costs and other fees with lenders who do a lot of mass market advertising. (Of course, you need to check these fees with any lender.) Often lenders will roll the closing costs back into your loan, so that you may get a check for the $10,000 you are seeking, but you may actually be borrowing more than that. In some cases, quite a bit more. Often a good time to get a home equity loan is when you refinance your home. If you are currently paying above market interest rates, consider refinancing and obtaining a home equity loan at the same time from the same lender you refinance with. Often in this case they'll give you a home equity loan with no additional closing costs. As far as the rates you've been quoted, the 4.75 percent seems closer to what I see being offered around where I live. The rates should apply to any amount of loan, not just to large amounts. In fact, many lenders will offer you a home equity line of credit instead of a straight home equity loan. Instead of giving you a check for the amount of your loan, you'll get a check book which allows you to write checks against your line of credit. This is preferable because you don't start paying interest on the money until you actually need it, and if you never need the whole $10,000 available in your credit line, you never actually borrow it. The balance on your home equity line of credit can go up and down just like a credit card balance, and you pay interest on just what you owe. With any loan, just be sure to understand all the fees and costs associated with it. Some lenders, especially those who advertise in the mass media, try to downplay or even hide the fees, and this can mean that what looks on the surface like a good deal isn't such a good deal once you dig down and see what you're really paying.