When Does It Make Sense to Take Out a Home Equity Loan?

Our Take

There are projects around your home that have been on your want to/need to do list for a long time. They sit there for a number of reasons. You don’t have the time, motivation or maybe it is money. Time can be hard to find, motivation often comes in an unexpected form, but money is another story. Home equity loans have been regaining popularity and are on the rise once again. We all have to live on a budget, however there are times when expanding that budget with a loan makes sense. You need to be smart about this decision making process though and get educated on your options. For example,learn the difference between a loan and a line of credit. The article below will layout your options so that you can understand what you are getting into. Once you are educated you can start to look at your own life and what makes sense.  If you can’t pay the money back, you shouldn’t plan on borrowing it in the first place. Or if the projects you want to complete are luxury changes, you may want to think twice about tackling them. Paying money back over a long period of time, is a long-term commitment and one that shouldn’t be taken lightly. Think about all of the other reasons in your life that you have chosen to borrow money. Do your home improvements warrant this commitment? Once you are informed of your option, only you can decide.

The smartest reasons to use your home equity include home improvements and education. (iStockPhoto) If you’ve owned a house for some time, you probably remember when home equity loans were a popular way to get extra cash. They were done all the time until around 2008 (see: The [not-so] Great Recession).

Read More at U.S. News & World Report

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