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home equity

Home Equity is Not a License to Spend

Many homeowners find themselves in a beneficial position a few or many years into their mortgage. As their payments continue, their mortgage balance gradually lessens and generally their home equity increases. It may be tempting to view this increase in equity as a license to spend. In other words, individuals may be tempted to start spending on wants versus needs and no longer delay gratification. A few arguments can be made in favor of using your homes equity in order to make purchases. Such arguments include home remodels, purchasing vehicles, taking vacations, and paying for college. Additionally, some may argue that if interest rates are low, one could use home equity and invest in the stock market – profiting from the spread of market gains and the loan interest. Further augmenting these arguments is the fact that the interest on a home equity loan may be tax deductible. Let me […]