interest only home equity loan
Local bank loans could aid flood victims
Several banks are offering loans at reduced interest rates to home and business owners affected by last week's flooding. Some of the loans are available only for flood relief while others are existing programs that are promoted following unusual events.
PNC Bank is offering home equity loans with a fixed rate of 4.99 percent for up to 20 years, and is waiving closing costs. Businesses can get a fixed 6.99 percent rate on certain new loans for up to $500,000. Applications must be made for personal loans by July 15 and by Aug. 18 for business loans.
Low- and moderate-income individuals and business owners also may qualify for grants of up to $500 that can be used for immediate needs.
Bank spokesmen did not return calls seeking more details.
M&T Bank is offering 1 percent off its usual interest rates for owners of flood-damaged homes.
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Investing home equity elsewhere risky business
Q: We recently attended a mortgage company workshop on equity maximization, in which they touted putting the equity in your home to work earning income and building wealth. They recommended refinancing to an interest-only loan and investing your equity, plus the difference due to your lower mortgage payments, in an insurance instrument plus side accounts.
The interest-only loan tax deductions would help offset taxable 401(k) withdrawals. Another key element was using a death benefit insurance policy as a primary investment device that would encompass side funds. They stated that even taxable IRA accounts could be legally rolled over, in time, to these side funds. These funds would then become nontaxable accounts from which you could borrow funds monthly for living expenses, etc.