What does Dave Ramsey say about home equity loans?

Dave Ramsey strongly advises against home equity loans (HELs) and Home Equity Lines of Credit (HELOCs), calling them a "stupid" financial move because they put your home, your biggest investment, up as collateral, risking foreclosure if you can't repay, and they keep you in debt longer when you're close to paying off your mortgage. Instead of borrowing against your house, Ramsey recommends getting extra work, living on less, and saving or paying off debt with cash, emphasizing discipline and avoiding debt.

What is the monthly payment on a $100,000 home equity line of credit?

For a $100,000 HELOC, monthly payments vary significantly: during the draw period (often interest-only), expect around $583-$833 (at 7-10% rates), while the repayment period (principal & interest) jumps to $1,161-$1,322 or more, depending on the interest rate and term, as HELOCs have variable rates that change with the prime rate, unlike fixed-rate home equity loans. 

What type of home loan does Dave Ramsey recommend?

A 15-year fixed-rate conventional mortgage is the only kind of loan we ever recommend at Ramsey. It keeps you on track to pay off your house fast and has the lowest total cost.

What is one disadvantage of using a home equity loan?

A major disadvantage of a home equity loan is the risk of foreclosure, as your home serves as collateral, meaning you could lose your house if you can't make the payments in addition to your primary mortgage. Other significant drawbacks include paying closing costs (2-5% of the loan), increasing your total debt, and potentially reducing your home's equity. 

What are the 4 funds Dave Ramsey recommends?

And to go one step further, we recommend dividing your mutual fund investments equally between four types of funds: growth and income, growth, aggressive growth, and international.

Home Equity Line of Credit - Dave Ramsey Rant

What is Dave Ramsey's 8% rule?

Dave Ramsey's 8% rule is a retirement withdrawal strategy suggesting retirees can safely take 8% of their portfolio's starting value annually, adjusted for inflation, by investing 100% in stocks, assuming high average market returns (around 12%). It's a controversial method, contrasting with the traditional 4% rule, as it relies heavily on consistent double-digit market gains and carries significant sequence of returns risk, meaning poor early market performance can deplete the fund faster, making it riskier than diversified approaches.
 

What are the downsides to Dave Ramsey's investing advice?

Cons of Dave Ramsey's Baby Steps

• $1,000 Emergency Fund Is Often Too Small. Today, $1,000 barely covers a minor car repair, dental emergency, or home issue. ...
• Debt Snowball Ignores Interest Rates. ...
• Fails to address reasonable time for debt payoff or realistic debt payments. ...
• Delaying Retirement Savings Can Hurt Your Future.

Who should not get a home equity loan?

Rates on loans and lines of credit can be even higher if your credit score is less than ideal. For these reasons, it may make sense to hold off on a home equity credit product until you're able to improve your credit or the Fed begins to lower rates (or both). Learn more: How Does the Fed Affect Mortgage Rates?

How much does a $50,000 home equity loan cost per month?

A $50,000 home equity loan typically costs between $480 to over $600 per month, depending heavily on the interest rate and repayment term (10 or 15 years), with longer terms and lower rates resulting in lower payments, while HELOCs might have lower initial interest-only payments but higher principal-plus-interest payments later, with rates fluctuating. For example, at around 8.2% interest, a 10-year loan could be ~$610/month, and a 15-year loan ~$480/month, while HELOC interest-only payments might start around $325-$400/month. 

How long do you usually have to pay back a home equity loan?

How long do you have to repay a HELOC? HELOC funds are borrowed during a “draw period,” typically 10 years. Once the 10-year draw period ends, any outstanding balance will be converted into a principal-plus-interest loan for a 20-year repayment period.

What is Dave Ramsey's 25% rule?

The Ramsey 25% rule is a personal finance guideline from Dave Ramsey suggesting your total monthly housing payment (mortgage principal/interest, taxes, insurance, HOA) shouldn't exceed 25% of your gross monthly take-home pay to prevent being "house poor" and allow room for saving, investing, and other needs. While a helpful benchmark, especially for budgeting rent or mortgages (including PMI/HOA fees), it's a guideline, not a strict rule, with some finding it difficult in high-cost areas but beneficial for financial flexibility.
 

What does Suze Orman say about paying off your mortgage early?

Suze Orman generally advocates paying off your mortgage ASAP for the mental freedom and security it provides, especially as you near retirement, but her advice is nuanced: don't deplete crucial savings for a low-interest mortgage if it leaves you vulnerable; instead, prioritize high-interest debt first, consider recasting your mortgage after making a large principal payment for lower monthly costs, and secure your emergency fund before aggressively paying down debt.
 

What mortgage lender does Dave Ramsey recommend?

Churchill Mortgage is our RamseyTrusted mortgage provider who has worked with our fans for over 30 years and is the only mortgage company that Dave specifically endorses. You can reach the Churchill team at 888-562-6200, or by visiting Churchill's Website.

Is a HELOC better than a home equity loan?

A Home Equity Loan gives you a single lump sum with a fixed interest rate, ideal for one-time large expenses like a major renovation, while a HELOC (Home Equity Line of Credit) acts like a credit card, letting you draw funds as needed up to a limit, usually with a variable rate, better for ongoing expenses like tuition, and offers payment flexibility during a draw period before full repayment starts. The key difference lies in how you receive funds (lump sum vs. revolving credit) and interest rate structure (fixed vs. variable), impacting payment predictability. Both use your home as collateral, so non-payment risks foreclosure.
 

How much income do I need to qualify for a $100,000 mortgage?

To recap: For a $100,000 mortgage, you need to make a minimum of $29,138 per year. To get this number, we calculated the percentage of income based on the 28/36 rule of thumb, which states that mortgage payments should be 28% or less of your gross income and no more than 36% of your total monthly debts.

What is the cheapest way to borrow from home equity?

The cheapest way to get equity out of your house often depends on current rates, but Home Equity Lines of Credit (HELOCs) are usually the most affordable due to lower upfront costs and interest-only periods, followed by Home Equity Loans (fixed rates, lump sums) and potentially a Cash-Out Refinance if you can secure a significantly lower primary mortgage rate. Other options like Home Equity Investments (HEIs) or sale-leasebacks offer alternatives, while personal loans or credit cards are generally more expensive. 

Which bank gives 7% interest on a home loan?

No single bank universally offers a flat 7% on all home loans, as rates vary by loan type (fixed/variable), term, borrower credit, and market conditions, but lenders like Axis Bank, Bank of India, Canara Bank, and Bajaj Housing Finance in India show starting rates around 7.1-7.2% (as of Jan 2026), while US lenders offer lower initial rates on ARMs (Adjustable-Rate Mortgages) or fixed rates potentially around 7% for certain terms/products, but generally lower or higher depending on the specific market and product. 

Is a home equity loan tax deductible?

Note: Interest on home equity loans and lines of credit are deductible only if the borrowed funds are used to buy, build, or substantially improve the taxpayer's home that secures the loan. The loan must be secured by the taxpayer's main home or second home (qualified residence), and meet other requirements.

Is it better to take a home equity loan or borrow from a 401k?

Using your home equity to borrow money can often be a better option than a 401(k) loan because it doesn't negatively affect your retirement savings. You can also change jobs without being required to quickly repay the loan.

What does Dave Ramsey say about HELOC?

Dave Ramsey generally advises against using HELOCs (Home Equity Lines of Credit) because they are debt secured by your home, creating risk of foreclosure, often have variable rates, and can lead to overspending, but he's made rare exceptions, like restructuring debt with an ex-spouse, to get people out of worse situations by changing types of debt, not adding new debt, focusing on discipline. He calls them "credit cards of the mortgage world" and emphasizes avoiding all debt, especially using home equity as collateral. 

Is it better to get a home equity loan from a bank or credit union?

Credit Unions: Typically, credit unions offer lower interest rates on home equity loans. This is because credit unions are nonprofit organizations. Their primary objective is to serve their members rather than to maximize profits.

What is the 80 20 rule Dave Ramsey?

Dave Ramsey's 80/20 rule states that personal finance is 80% behavior and 20% knowledge, meaning that understanding what to do with money is easy, but actually doing it—through discipline, habits, and mindset—is the real challenge and key to financial success, like budgeting, saving, and paying off debt. It emphasizes changing your actions over just knowing financial facts. 

What is the 7 3 2 rule?

The 7-3-2 Rule is a financial strategy for wealth building, suggesting it takes 7 years to save your first major milestone (like a crore), 3 years for the second, and just 2 years for the third, leveraging compounding and accelerating savings. It emphasizes discipline, consistency, and reinvesting returns, showing how time reduces the effort needed for subsequent wealth milestones as compound growth takes over.
 

Is Dave Ramsey a Trump supporter?

He has blamed politics for what he considers Americans' economic dependence, and has said presidents should do "as little as possible" about the economy. Ramsey supported Donald Trump in the 2024 United States presidential election.