Our story continued...

Do you remember the house that we purchased in 2002, that we talked about in a previous post? Well, we ended up spending way too much on that house in repairs, and to cash out my partner, I ended up getting an LOC on that house for 80% LTV. Remember the terms that we talked about before? If you do not understand the last statement, then you need to study much more if you have your heart set on buying real estate. Anyway, to explain to those who do not understand, an LOC is an acronym standing for Line Of Credit, and LTV stands for Loan To Value. We then cashed out our partner in that deal, and rented the house out. Now, 6 years later, the house is worth about $55K, and we have a $35K LOC on it. So, if I wanted to sell, I would be able to sell it and make money on it. However, the rental amount is more than paying the payment, and we have $200.00 (after expenses) coming in besides. Now, with a LOC, or a HELOC, the credit reporting companies count those as revolving credit. If you have any revolving credit maxed out, that will be counted against you, and will affect your credit score. That has happened to us in the years since we purchased our first house. More later.