Explain one way in which equity can be thought of as less costly than debt?
109784
The cost of debt, and the cost of equity, should be calculated seperately to see which one is less costly.  The after tax cost of debt is calculated by:\n\nAfter-tax cost of debt  =  Interest rate x  (1 -  tax rate)\n\nThe cost of equity can be calculated using the Capital Asset Pricing Model:\n\n Kc   =   Rf   +   beta x ( Km - Rf )\n\n where\n\n    Kc is the risk-adjusted discount rate (also known as the Cost of Capital);\n    Rf is the rate of a "risk-free" investment, i.e. yield on the 10 year treasury bond\n    Km is the return rate of a market benchmark, like the S&P 500.
528420
assets = liabilities + stockholder's equity (A=L+E)\n\nif A-L < 0, then shareholder's equity is less than zero\n\nin other words, if you have more liabilities than assets
1155603
The advantage is in knowing that you have equity in your home already....Don't let the seller know what it got appriased at - ok - - -Now - if you needed help with the closing cost, that is another matter, the seller could help with closing cost, and you would make a offer to the seller to adjust the purchase price....I do not recommend this - but it has been done in the past, expecially if you already have your financing approved.  The advantages is down the road, if you wanted to do a line of credit - you have the equity of 11,000 to use - for newer carpet - etc....  I would just let it build since home markets are on the rise in different areas, and on the decline in others.  Good Luck.
596751
The answer to this question is highly dependent on a number of factors, including the company's industry, competitive position, strategy, operating budget, and the risk tolerances of its owners.  The appropriate debt to equity ratio and dividend payout rate depends will be influenced by:\n1.  Current assets and liabilities will determine the amount a short term debt financing is available from a bank on a revolving line of credit.  Excess availability may be needed to fund short term seasonal needs.\n2.  The amount and type of long-term assets will help determine the amount and type of term debt available.\n3.  The company's fixed charge ratio (commonly, EBITDA divided by the sum of maintenance capital expenditures, taxes, principal and interest on debt) should be maintained at a comfort level (depending on the type of business and industry, at least 1.2 and probably 1.5 - investment grade companies are well over 2.0)\n4.  Cash flow required to fund growth (working capital and growth capital expenditures) will reduce the amount available to pay dividends.  \n5.  Dividends should come out of cash flows needed to maintain and grow the business.
646823
it is assets MINUS liabilities equal equity\n\nassets = liabilities + equity\n\nevery debt(s) must have matching credit(s)
749369
This is from an article at http://www.reversemortgagepage.com...\nAm I comfortable with the disadvantages of a Reverse Mortgage?\nThis is perhaps the most important question you must ask yourself.  You first must know the disadvantages of a reverse mortgage.  In a home equity mortgage the borrower pays down the debt over a set term, usually 30 years.  Yet, in a reverse mortgage, the borrower builds up debt while they live in the home.  \nIn addition to building up debt, there can be significant up front costs when brokering a reverse mortgage.  If you plan on only taking out a small portion of money or plan on living in your home for only a short time then these costs can push the effective rate on the home up considerably.  \nThe last significant disadvantage of a reverse mortgage is that you leave your heirs with a noticeably smaller legacy.  While this is uncomfortable to discuss, it is something that needs to be discussed by you and your heirs.  When you take out a reverse mortgage, you will have less equity in the home and likewise, the heirs will have a smaller portion of the home’s value.  Also, the longer you live in the home, the more interest builds up, which further lessens the equity you have in the home.\n\nThe answer, I think, is that reverse mortgages do have up-front fees, but are still a good idea in the right situation.
557677
Im not sure about how much it should cost but if your looking for an equity loan to pay for it i may be able to help. contact me at jfreeman@bourdeaufinancial.com
848983
Need more specific information.  I would sell as quickly as possible and take the equity and put it into something more managable.
138308
There's no "better" or "worse"; just varying levels of risk.  Put what you can afford to lose in higher risk accounts, because...it IS higher risk, and it's possible (although not likely) that you could lose all of it.
855522
If you can afford to take the time to do it, build the house. That way it's what you want. You'll build up equity sooner that way and receive much more personal satisfaction.
1047397
There is something call "equity sharing". \n\nHere's some info:\nhttp://www.andysirkin.com/HTMLArticle.cfm?Article=5&Hit=1\n\nRegards...
809669
Use this formula:\n\nWACC = We*Re + Wp*Rp +Wd*Rd*(1-t)\n\nwhere We is the weight of equity (8MM/16MM = 0.5)\nwhere Wp is the weight of preferred (1MM/16MM)\nwhere Wd is the weight of debt (7MM/16MM)\n\nRe is the return on equity\nRp is the return on preferred stock\nRd is the return on debt\n\nt is the tax rate = 0.4
585916
Home Equity is the portion of your home's value that isn't financed.  You can borrow money from lenders against your equity (a home equity loan or equity line of credit).  The interest is tax deductible.  Most lenders will loan up to 100% of your home's appraised value, but then you'd have no equity in your home.
549200
Equity in one property, can make it easier for you to buy your next property using a lease with option to buy.  The seller will see you have a track record and you may appear as a more substantial buyer.\n\nThe lease payments allow you to control or live in the property until you can save up a downpayment to use towards taking complete ownership.  You do not pay tax on rent.  Your equity on your first property stays intact. \n\nYou can also borrow against your equity, and not pay tax on borrowed money.  An equity line of credit is sometimes more convenient, less expensive to originate, and at a better interest rate than a 2nd mortgage. \n\nSome creditors will look at your equity and issue a line of unsecured credit. A line of credit like this leaves your equity intact, and gives you money to spend towards your new property.  You would not pay tax as you use your line of credit because you are again borrowing money. \n\nIt is correct that you can sell your first property and cash in your equity, but then you would not be purchasing additional property, you would be replacing one property with another.  It is possible you may be able to sell just your equity.  That would mean you now have a partner or co-owner on your first property, and money to spend towards towards additional property.
1087325
A home equity loan, because the loan is secured by the value of your house.  Obviously this only works if you have a house.  In general secured loans are easier to get, because they are less risky for the lender.
345234
You can sell/buy when ever you want. In the eyes of the law you are no longer in debt and don't need to worry about it.
969327
I thought in my Finance class that we were told internal financing (Retained Earnings) is the cheapest form of financing!  You might want to do some more research.