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is the strong housing market supporting the diamond market...
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strmrdr
Super_Ideal_Rock
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With interest rates as low as they are no one wants to keep money in the bank.
That pushes more money into the stock market and commodities markets.
It also makes buying luxury goods more likely.
When the interest rates get back up and they will there are going to be a lot of people on both sides of the buying/selling table in for a rude awakening.
That pushes more money into the stock market and commodities markets.
It also makes buying luxury goods more likely.
When the interest rates get back up and they will there are going to be a lot of people on both sides of the buying/selling table in for a rude awakening.
Patty
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Mara
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lostdog
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With all of the wealth that built up as the housing market rose, you better believe that consumer spending was partially fueled by tapping that equity, and big ticket items probably felt the effect to the greatest degree.
And the other point above, that people moved their wealth away from banks (and bonds and interest rate linked investments), is true, too. And in the wake of the dot com bust, they moved it out of the stock market into something that could never crash, real estate.
Slowly they went back into the stock market, and lately they have stormed into the commodities market. Between China''s appetite, the impact of our middle east adventures, and the simple fact that consumption didn''t decline when oil settled in above $40/bbl but instead production capacity became strained, everybody is now spooked about commodiities. It''s become a hot area. (So rush to put your new found real estate wealth into it, I guess is the conventional wisdom.)Soybeans (people have to eat) as much as anything in recent month.
The big concern is that if real estate crashes, it will put a freeze on a lot of other economic activity as well. Not complete doom and gloom, but between consumer spending from equity and consumer spending associated with new home purchases, it''s been a significant driver.
And the other point above, that people moved their wealth away from banks (and bonds and interest rate linked investments), is true, too. And in the wake of the dot com bust, they moved it out of the stock market into something that could never crash, real estate.
Slowly they went back into the stock market, and lately they have stormed into the commodities market. Between China''s appetite, the impact of our middle east adventures, and the simple fact that consumption didn''t decline when oil settled in above $40/bbl but instead production capacity became strained, everybody is now spooked about commodiities. It''s become a hot area. (So rush to put your new found real estate wealth into it, I guess is the conventional wisdom.)Soybeans (people have to eat) as much as anything in recent month.
The big concern is that if real estate crashes, it will put a freeze on a lot of other economic activity as well. Not complete doom and gloom, but between consumer spending from equity and consumer spending associated with new home purchases, it''s been a significant driver.
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diamondlil
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Patty
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i 'm thinking about taking out some home equity to buy this one.
http://www.whiteflash.com/hearts_arrows/A-Cut-Above-H-A-cut-diamond-499064.htm#
i would need a custom made ring to fit my ring finger and pinky.i think it's call a 2 finger ring.
wonder
is that price includes the discount for ps members
http://www.whiteflash.com/hearts_arrows/A-Cut-Above-H-A-cut-diamond-499064.htm#
i would need a custom made ring to fit my ring finger and pinky.i think it's call a 2 finger ring.
sjz
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I don''t see the wisdom of taking out HE loan for a luxury item. I can see doing it to buy a car IF you need a car, but not a sports car or a luxury car, though. I''m pretty conservative when it comes to cars, though...basically all I want is a safe vehicle that has plenty of room in it for my kids, my dog, and all our stuff. Oh, and we HAD to get a DVD player in this last van...lol! Kids had to be entertained on those road trips to keep mommy''s sanity from disintegrating!Date: 3/30/2005 6:51:14 AM
Author: diamondlil
Using a HE loan for a diamond certainly would not make much sense, but buying a car with it is another story. The interest rate is extremely low and tax deductible too -- not that I would be buying a Lamborghini with it though.
The only way I could ever see myself purchasing a diamond, or any other type of luxury item that would cost enough to warrant a loan would be if I won the lottery. THEN I might have to buy some kind of bling...after I pay off my house and build a new house for my parents, and set my kids up with trust funds, and build a new gymnasium for their school, and a few other things I''ve always dreamed of doing and never had the cash to do...
Mara
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What makes more sense to me (regarding the car) - is to refi your house with a no closing cost loan (perferable before the interest rates rose). Take some cash out of the house (if you are more house poor and can afford the extra payment)- use it to pay for the car. That way you are paying a fixed interest rate rather than a variable rate tied to prime. Pay it off just as you would a car loan.
Or ...take advantage of some of the free money the car dealerships offer.
Though, I''ve only done the latter. If you have to take a home equity loan to pay for a luxury item, then don''t buy it.
Or ...take advantage of some of the free money the car dealerships offer.
Though, I''ve only done the latter. If you have to take a home equity loan to pay for a luxury item, then don''t buy it.
hoorray
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IMO, the catch with using HE $$ for a car loan is the usually the term of repayment. If you need to finance a car, it makes sense to use a tax deductible loan to do it. However, making the standard payments means you are paying that car off over either 15 or 30 years. You should accelerate the payments to a normal car loan period so that you aren't saddled with it long after the useful life of the car. You can usually repay those loans at more than the minimum payment rate.
The downside to this is that you have now coupled home and car ownership. If you decide to sell and move, you have to pay off your car when you close the loan, rather than having that money to roll into another down payment.
The downside to this is that you have now coupled home and car ownership. If you decide to sell and move, you have to pay off your car when you close the loan, rather than having that money to roll into another down payment.
sjz
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There are ways of turning equity in your home into spendable cash. That''s how I would do it, if I needed to buy a car. Buy the car for cash, not finance it. Using a loan to get a loan is foolish. And I wouldn''t cash in on the equity of my house to buy a car unless it was absolutely necessary, either. Doing something like that just so that you can have a new car is not money-wise. It''s one thing to go out on a limb to buy a car if yours breaks down and repairs would cost more than the car''s worth. It''s a totally different thing to buy a car that''s beyond your financial means just so that you can have something impressive, or to fullfill a dream. I feel the same way about diamonds, vacations, or anything that is not a necessity.
Many of my friends purchase autos this way. It makes sense. They don't do it to afford a luxury car. They use it to buy a car, save the opportunity cost that money could make & the interest is tax deductible. They treat it much like a car loan & usually the interest rate is lower than can be financed through, especially provided the tax break on the interest. The only time we used our equity line (which is prime) was build a deck, remodel, etc. I'm not a fan of buying a car with it; though, it makes sense if one can do it responsibly.
Like anything, being responsible in the way one handles ANY debt is key. Yes, there are people who have lost their homes because of it. The thing about debt is it has to be PAID BACK. And, with something like your home at stake, better be done on time.
The only time that tapping into your home equity is when you can afford the extra premium without a problem & you have sooooooooooo much equity in relationship to your liquidity. But, then again, I'd just refinance.
Like anything, being responsible in the way one handles ANY debt is key. Yes, there are people who have lost their homes because of it. The thing about debt is it has to be PAID BACK. And, with something like your home at stake, better be done on time.
The only time that tapping into your home equity is when you can afford the extra premium without a problem & you have sooooooooooo much equity in relationship to your liquidity. But, then again, I'd just refinance.
diamondlil
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You are right, F&I, the key is paying the loan back *RESPONSIBLY.* Our HE loan is a credit line so it is available to be used over and over again as necessary for emergencies, home improvements, a car, or whatever. I could not refinance my house today for the interest rate I have (we got it at an all-time low), and my credit line is prime minus 0.25% -- Can''t get that anywhere. I would be great if I could finance a car at 0% through the dealer, but that is not available on many vehicles.Date: 3/31/2005 12:526 PM
Author: fire&ice
Many of my friends purchase autos this way. It makes sense. They don''t do it to afford a luxury car. They use it to buy a car, save the opportunity cost that money could make & the interest is tax deductible. They treat it much like a car loan & usually the interest rate is lower than can be financed through, especially provided the tax break on the interest. The only time we used our equity line (which is prime) was build a deck, remodel, etc. I''m not a fan of buying a car with it; though, it makes sense if one can do it responsibly.
Like anything, being responsible in the way one handles ANY debt is key. Yes, there are people who have lost their homes because of it. The thing about debt is it has to be PAID BACK. And, with something like your home at stake, better be done on time.
The only time that tapping into your home equity is when you can afford the extra premium without a problem & you have sooooooooooo much equity in relationship to your liquidity. But, then again, I''d just refinance.
We purchased my husband''s car using the credit line and paid it off like a regular car payment (actually more since we paid it off in a year). Even if we stretched out the payments to 3 or 4 years like a regular car loan, with the lower rate and tax deduction, you cant beat it. And since it''s a credit line, having it available as an *emergency* fund (because you never know what could happen) gives me a lot of comfort. Using it for a luxury item or general spending would be very unwise, and like any credit line, paying the minimum monthly payment gets you no place fast.
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when we did our 04 tax we had nothing to deduct except 1 child credit and 3k lost for stock.i'm so proud to have no deduction on interest paid because,that means i don't owe anybody money.don't forget the equity in your home isn't real money until you sell,just like holding a stock that you're making $100 a share now but in reality you haven't make a dime yet until you sell the stock.as interest rate rise it will slow down the housing market soon or later the bubble will burst,when that happens the people who spent all their home equity will be in for a rude awakening.the people who are buying a home with 0% down or interest only payment
will be out on the street.
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