home equity

Reasons to use home equity: 5 good, 1 bad

Home Equity » Reasons To Use Home Equity: 5 Good, 1 Bad

Good and bad ways to spend home equity
Previous
1 of 8
Next
Good and bad ways to spend home equity © bahri altay/Shutterstock.com

Good and bad ways to spend home equity

Homeowners who have equity might be tempted to extract some of that wealth and use it for other immediate needs or wants.

But should you use a cash-out refinance, home equity loan or home equity line of credit to replace your roof? What about to renovate or remodel your home? Pay off your credit cards? Finance your child's college education? Supplement your retirement income? Which uses of home equity are smarter or more legitimate than others?

An easy answer would be nice. But such decisions aren't simple. In fact, any reason might be good or bad, depending on your situation.

As Jay Voorhees, broker and owner of JVM Lending, a mortgage company in Walnut Creek, California, says, "It all comes down to responsible borrowing."

With that in mind, here's a look at six common home equity cash-out scenarios and why they might -- or might not -- make sense for you.

Previous
1 of 8
Next

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
MORTGAGE & REAL ESTATE NEWSLETTER

Timely market news and advice for consumers ready to buy, sell or invest in real estate. Delivered weekly.

advertisement

Ask Dr. Don

Should I lock my HELOC rate?

Dear Dr. Don, We have a $128,000 home equity line of credit, or HELOC, which we've maxed out. The draw period ends two years from now. Combining the first and second mortgages by refinancing is not an option because of... Read more

Partner Center
advertisement

Connect with us