Is that HELOC Still Worthwhile?
By: Kevin Dombrowski
As of 5/31/18
Past performance is not an indication, prediction or guarantee of future results.
Weekly Update
Markets were slightly down this week as continued fears of global tariffs and their effects on the economy lingered. In fact, the EU said it would begin implementing tariffs on $3.2B of US imports beginning on Friday. Trump responded by threatening a 20% tariff on European cars coming into the US. So buy your Benz now! 
 
We are in a unique situation with continued solid economic fundamentals paired with tremendous amounts of uncertainty around trade. With the markets reacting mildly, some believe it is be cause Wall Street does not predict that we are heading into a full trade war. There will likely be additional negotiations throughout the summer so expect the market to remain choppy until things get sorted out. 
 
As of Thursday, the Dow Jones Industrial Average index closed eight straight days in the red, matching its longest losing streak since March 2017 . It avoided closing in the red on Friday, which would have been the longest losing streak for the index since 1978 .
 
In other news, OPEC Members reached a deal that would result in an effective rise in production of around 600,000 barrels a day . Forecasts are showing a decrease in oil prices through the year and well into 2019 which could translate into lower gas prices. 
 
Make sure a Home Equity Loan is Worth it
For years, many Americans took out home-equity loans and home-equity lines of credit (HELOCs), to pay for cars, education, and even trips. They were easy to open, fairly inexpensive, and a lot of the interest could be deducted. However, with the new tax plan rules on deductibility have changed. 

What is different? Last year’s tax overhaul prohibits interest deductions for home-equity loans and HELOCs unless the funds are used to buy, build, or improve your own homes. So, no more deducting interest for a HELOC used to pay for your children’s college or that trip to Fiji.

The new law allows you to deduct interest on total debt up to $750,000 on two homes (previously set at $1M).  The debt must be secured by the home, and the expense utilized for the home to which the debt applies.

Also, some homeowners will find that the write-off may not decrease their tax bill because the new tax overhaul expanded the “standard deduction” to $12,000 for single filers and $24,000 for married couples filing jointly. Because of the changes to the standard deduction, the number of taxpayers expected to use the mortgage interest deduction is anticipated to drop by 57 percent, according to CNBC That would mean that only 18 million taxpayers would utilize this deduction in 2018, down from 46.5 million in 2017.   

With all the changes to the interest deductibility of home equity loans and HELOCs, along with rising interest rates that will inevitably impact any loans with variable or adjustable interest charges, do ample research before opening a new loan or using an existing one. Make sure you really understand if your expenses will meet new deductibility requirements, as well calculate your actual borrowing cost. 

Summer Trading Lull
Global markets could be in for an especially dull time this next month. Why? Traders will shift their attention away from the pit to the World Cup matches. Many of the games will be played during some or all of weekday trading hours in Europe, Africa, and North America An analysis of trading data carried out during the 2010 World Cup found that trading volume dropped roughly 33% from regular levels during games and by a whopping 55% when their home country was playing. Additionally, to understand just how large of a global event this is look at 2014, where an estimated 3.4 billion people tuned in to the World Cup (47% of the world population).  
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