People borrow against their home's equity for myriad reasons. The two most common are to pay for home improvements and to consolidate debt. Other uses for equity money are: to pay tuition, medical expenses, living expenses during unemployment, and big-ticket purchases.

There's one thing to watch out for when using equity debt to pay for medical care, unemployment or big-ticket items. You are unilaterally disarming yourself in the battle against creditors should you eventually have to declare bankruptcy. In a Chapter 7 bankruptcy, you can walk away from unsecured debt, such as credit card balances. But if your house secures those debts, you are stuck with paying them. If you can't make the payments, you can lose the house to foreclosure, and you won't see a dime of the sale proceeds until all the creditors are paid. It might be better to tap other sources of money: savings, your 401(k) or individual retirement account, or stocks and bonds.