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A12 BUSINESS
Tuesday 23 augusT 2022

Liz Weston: 3 reasons not to tap your

home equity right now

By LIZ WESTON of NerdWal- ing the Great Recession of meowners 62 and up to
let 2008-2009, housing prices convert home equity into
Soaring real estate values can go down as well as a lump of cash, a series
mean many homeowners up. Borrowers who tapped of monthly payments or a
are awash in equity — the their home equity were line of credit they can use
difference between what more likely to be “under- as needed. The borrower
they owe and what their water” or owe more on doesn’t have to pay the
homes are worth. The aver- their houses than they were loan back as long as they
age-priced home is up 42% worth than those who live in the home, but the
since the start of the pan- didn’t have home equity balance must be repaid
demic, and the average loans or lines of credit, ac- when the borrower dies,
homeowner with a mort- cording to a 2011 report by sells or moves out.
gage can now tap over CoreLogic , a real estate Another potential use for
$207,000 in equity, accord- data company. home equity is to pay for a
ing to Black Knight Inc., a Other risks are less obvious nursing home or other long-
mortgage and real estate but worth considering. term care. A semi-private
data analysis company. This undated file photo provided by NerdWallet shows Liz Weston,
Spending that wealth can a columnist for personal finance website NerdWallet.com.
be tempting. Proceeds Associated Press
from home equity loans
or lines of credit can fund
home improvements, col- YOU MAY NEED YOUR room in a nursing home
lege tuition, debt consoli- EQUITY LATER cost a median $7,908 per
dation, new cars, vaca- Many Americans aren’t month in 2021, according
tions whatever the borrow- saving enough for retire- to Genworth, which pro-
er wants. ment and may need to use vides long-term care insur-
But just because something their home equity to avoid ance. Some people who
can be done, of course, a sharp drop in their stan- don’t have long-term care
doesn’t mean it should be dard of living. Some will do insurance instead plan to
done. One risk of such bor- that by selling their homes borrow against their home
rowing should be pretty and downsizing, freeing up equity to pay those bills.
obvious: You’re putting money to invest or supple- Clearly, the more you owe
your home at risk. If you ment other retirement in- on your home, the less eq-
can’t make the payments, come. uity you’ll have for other
the lender could foreclose Other retirees may turn to uses. In fact, a big mort-
and force you out of your reverse mortgages. The gage could preclude you
house. most common type of re- from getting a reverse
Also, as we learned dur- verse mortgage allows ho- mortgage at all.q

Cineworld theater chain confirms it’s

considering bankruptcy

LONDON (AP) — Cineworld protection in the U.S. and bankruptcy is one option
Group PLC, one of the similar actions elsewhere. it is weighing to help pre-
world’s largest movie the- The British company, which serve a business that has
ater chains, said Monday owns Regal Cinemas in the struggled to rebound from
that it is considering filing United States and oper- the impact of COVID-19
for Chapter 11 bankruptcy ates in 10 countries, said restrictions. Cineworld said
it’s holding talks with major
stakeholders such as lend-
ers. It expects operations
to run normally following
any filing and “ultimately to
continue its business over
the longer term with no
significant impact upon its
employees.” It has about
28,000 workers, according
to the company’s website.
Company shares tumbled
58% Friday after The Wall
Street Journal reported
A man walks past a Cineworld cinema in Leicester Square, that the company was pre-
London, on Oct. 5, 2020. paring to file for bankrupt-
Associated Press cy within weeks.q