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.