Home-equity loans could sink your retirement

Market Watch - “I feel the main problem looming for pre-retirees and retirees is the common adjustable rate nature of HELOCs,” said John Salter, an associate professor in the personal financial planning department at Texas Tech University. “Currently we are in a very low interest rate environment, and what looms at some point are rate increases which in turn will increase HELOC holder’s payments—we can somewhat say there’s nowhere for rates to go but up in the future.”

But whatever it is, pre-retirees and retirees who have a balance on their home equity line of credit, or HELOC, will need to plan for the day when that debt reaches its 10-year anniversary.

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“I feel the main problem looming for pre-retirees and retirees is the common adjustable rate nature of HELOCs,” said John Salter, an associate professor in the personal financial planning department at Texas Tech University. “Currently we are in a very low interest rate environment, and what looms at some point are rate increases which in turn will increase HELOC holder’s payments—we can somewhat say there’s nowhere for rates to go but up in the future.”

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