All Forum Posts by: Dong Yan

There's never a bad time to open a HELOC. They're typically free to start up and don't cost a thing until you use them. As for your ability to pay it off quickly- there will always be risk- that's what makes REI so rewarding. So- yeah, maybe you will be able to pay it off quickly, but maybe not, you have to be willing to take the risk if you want to enjoy the reward.

@Dong Yan

I’m conservative and works use a long term fixed rate loan. Rates today are still quite low historically and if your plans change as @Kushaal Malde pointed out you have the safety of holding the property with a known expense vs a variable rate. 

It's my understanding that a HELOC home equity line of credit is a loan utilizing your home equity as the security/collateral. A Home Equity Loan is another name for a second mortgage. Or second position loan typically amortized over the length of the loan often at a fixed rate.

@Dong Yan

I do not have Earthquake insurance either.  The most obvious drawback is that it is quite expensive.  Secondly, once the claim is made, insurance companies fight back as hard as they can to avoid payment.  I'll share a brief story that is relevant to your question.  There have definitely been multiple cases where adjacent buildings suffered damage during a natural disaster, but the insurance company refused to pay a dime and was not held liable in court.  Consider two adjacent buildings, A and B.  Building A has earthquake insurance while building B does not.  Both buildings are damaged during an earthquake. Part of building B falls and comes into contact with building A as clearly observed in the aftermath.  The owner of building A files a claim with his insurance company citing damage done due to earthquake.  The claim is overturned by the company.  The insurance company refuses to pay.  The owner of building A takes the insurance company to court stating the company is liable to cover the losses to building A.  The insurance company states that the damage done to building A was not caused by the earthquake, but rather, was caused by part of building B falling into building A.  The insurance company's defense states that since building B is not covered by earthquake insurance, the liability rests either on the owner of building B, or the contractor who built building B.  The court rules in favor of the insurance company since it could not be proven that building B did not cause the damage to building A. This is actually a true story and is testament to the nature of how insurance companies operate.  

So, if considering earthquake insurance (or flood insurance, or the like), it should only be considered if the surrounding units and/or buildings have the same type of insurance relative to that natural disaster.