There have been a number of replies warning about having debts secured by your home above 100% of the home's fair market value. Actually, for most people a better number would be closer to 93%--there are expenses involved in selling a house, such as real estate commissions, that have to be paid from the seller's side of the transaction. One may want to keep it even lower--the housing market is cyclical and house prices in specific neighborhoods do go up and down.A former coworker had purchased a home. A year later she took out a home equity loan to retire about $16K of debt on her credit cards. Since she wasn't on a debt reduction plan (and in fact considered it fair game to live in consumer debt), when she sold her home a few months later, she had both the mortgage and the home equity loan and also had driven up about another $10K of consumer debt on one of her cards. The mortgage balance + HEL balace were still below the selling price, but she had to put about $5K on her other card when she sold to cover sales commissions.The warning of itemizing has already been mentioned. If I recall corectly, the fraction of the loan that exceeds the equity one has in the place (the fair market value as of that date minus all other debts secured by the property on that date) is not tax deductable for the life of that loan. One could probably get better information on this on the "Tax Strategies" board.
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