Mortgage Insider Cited on Equity Loans in Washington Post

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Well, the Mortgage Insider, got cited in today’s edition of the Washington Post where I discussed the financially irresponsible practice of paying off credit card debt with home equity loans.

The reporter, Dan Rafter, who interviewed me for his story,
“For Every Loan, a Proper Use: There’s More Than One Way to Tap Home Equity” did a good job outlining all views on home equity loans and treated my comments fairly as well when he writes,

Rob Blake, a mortgage loan officer in Colorado, president of Integrity First Mortgage and founder of the Mortgage Insider Web site ( http://themortgageinsider.net), said that most consumers aren’t savvy enough about debt to be entrusted with a home-equity line of credit.

Blake said he especially hates to see consumers rely on either home-equity loans or HELOCs to pay off credit card debt.

“The studies have all shown and proven that within two years of paying off their credit card debt, the average American is back in debt equally or more,” Blake said. “It’s ridiculous. Do not pay off your credit card debt with a HELOC. Most people will be back in the same situation with their credit card debt within two years.”

But I would just like to clarify, the studies I quoted showed over 85% of Americans are right back into the same or greater amount of credit card debt just 2 years after consolidating using home equity loansof some kind.

So not to put too fine a point on it, but “I” didn’t “say most consumers aren’t savvy enough about debt to be entrusted with a home-equity line of credit”…the research does.

I also made the point which didn’t make it into the piece, that trading “unsecure” credit card debt for the secured debt of home equity loans, putting your house up as the security, is always a suckers game.

What bank wouldn’t love to convert those credit card balances that are easy to avoid paying in tough times into home equity loans which folks are less likely to let go?

The banks just love it when you get suckered into doing something in their best interest…and pay them to do it!

Other than that, use the link above and go read Dan’s article, and also take a look at my home equity loan post entitled HELOC Mortgage Dangers, as well.

Good Luck