Unclear on the concept of finance

[kranky]

In today's Real Estate Q&A column was this exchange... I bet when the guy who asked the question sees it in the paper, he'll be glad they didn't attach his name to it.

Q: "I purchased my home for $480,000 and it is now worth $600,000. Is there any way of cashing out this additional $120,000 of equity and applying it to the loan balance?"

A: You can borrow the $120,000, which will increase your loan balance by that amount, and then use it to pay down the balance by the same amount. Of course, that will leave the balance right where it was, and you will be poorer by the amount of the closing costs on your new loan.

 

[PHiuR]

wow...

what he can do is sell his house and make that $120k and buy a cheaper house.