sorry for the newbie housing owning question.

OK, if i am a house owner, and if the prices go up. how can that benefit me (besides cashing it out, which means i would need to spend more money to get another house to live in)?

will i be able to use the "line of credit" in other ways?

 

you can take a home equity loan or get a line of credit...but an appreciating house is worth nothing untill you sell it

 

how is that different from getting a loan from the bank?

lower interest? tax deductable?

 

no loan fees or closing costs, you only pay interest on the barrowed amount, barrow a sum then pay it back barrow again, if home continues to appreciate you can ask to have reapprasel to increase amount available to you.

 

The no loan fees or closing costs depends upon what type of loan you do and what state you are in.

Home Equity loans also precipitate more foreclosures if property values happen to drop.

Some pluses and some minuses.

As to how the value increase helps you, basically nada - at the moment. It does mean you live in a pricier neighborhood so you might have to buy a better car or a 2nd S2000

Your big benefit is when you sell.

 

Benefits of increased house values:

You can borrow some new equity of your house to do whatever you want: invest in stocks, buy second house .... Interest of home equity loan is usually lower than most other loans and they are tax deductable if you itemized your tax returns.

In California, you paid lower property tax than the new owners because property tax is limited to 2% increase per year, regardless of value of your current house. The new owners must pay tax based on the new values when they bought it, it can be a lot higher.

If you live in your house for 2 out of the last 5 years, you do not pay tax on the $250k gain if you are single and $500k for married couple.

 

The most common benefit is you may be able to eliminate PMI (private mortgage insurance), a fee that they slap on you when you don't own enough equity compared to value of the house.

 

OT: how much is the PMI usually / normally?

 

My PMI was $159/mo. I got rid of that asap.

Check the laws on PMI for your state. Some states allow you to remove PMI when your house appreciated to the point that you have at least 22% equity.

Other states, such as NJ, do not take appreciation into account, and PMI stays until you reach 22% equity based on your purchase price. Even then the bank doesn't have to remove PMI if they don't want to.

Some more info...
http://www.ftc.gov/bcp/conline/pubs/alerts/pmialrt.htm

 

Why wouldn't you just take out a 80/20 loan to avoid PMI? PMI, esp. in NJ, brings with it many other negatives.