"Dan Krueger" wrote in message
ink.net...
For a home equity loan (or line of credit) you are borrowing against the
"equity" in your home. They will do an appraisal. The price you paid has
nothing to do with it. That's why they use the word "equity". It's the
difference between the market value and your mortgage balance.

How are you jeopardizing your home if you can afford to make the payments?
This is no different than any other loan. If you can't pay for a boat
loan from XYZ bank, you will lose your boat but your house can't be too
far behind that. It's not about affordability, it's about tax savings.
You can always pay off your home equity loan with a conventional loan but
that wouldn't make any sense. The bottom line is that if you can't make
the payments, you shouldn't be boat shopping anyway.

The live aboard type boat you refer to only matters if it is a separate
loan and you are declaring your boat as a second home. With a home equity
loan, you can buy a canoe, a corvette, and a bag of peanuts if you
qualify. You get a checkbook - literally.

Tax savings can be huge. It could even drop you down into the next,
lower, bracket. Over the term, you are saving thousands of dollars.

I'm not in the biz of selling any type of loan so I am only speaking from
personal experience.


Of course you should not buy a boat unless you can afford the payments. The
point though is that unexpected things can and do happen - layoff, serious
illness, etc. If your boat is on a home equity loan then your house is at
risk. If it's on a separate loan then the house is not at risk.

If the boat qualifies as a 2nd home, tax savings can indeed be large. For
example, on a $100,000 loan at 6% the first year tax savings will be about
$2100 for someone in the 35% bracket (combined federal and state).

--
Peter Aitken