You have erratic or hard-to-prove income: Because home equity borrowing is a secured loan and a number of lenders still base loan approval on credit score alone, you have a better chance of approval, providing your credit score is good. Plus a line of credit can act as backup between income infusions, usually at a lower rate than credit cards.
Your
child is applying for financial aid at a private school:
Need-based student aid decisions are determined partially on your
assets, including primary residences whereas credit card debt is not
reflected. Consolidating credit card or other outstanding debt using
home equity dissipates the value of that asset, more accurately reflecting
your financial picture. NOTE: This does not apply to FAFSA, the Free
Application for Federal Student Aid.
You need to bridge a short financial gap:
If you have a realistic view of your financial picture, and have determined you have the means and financial discipline to pay down the loan, there are benefits that could make home equity borrowing the smartest choice.
Find the best home equity rates.
Source: Nancy Flint-Budde, independent Certified Financial Planner (CFP)
