Best And Worst Reasons To Tap On You Home Equity

Best And Worst Reasons To Tap On You Home Equity

Everyone will agree that your home is one of your most prized possession. It is the very reason why most people turn to their home equity in times of financial needs. However, just because you’re able to build enough equity on your doesn’t necessarily mean you should use a home equity loan to tap on your resources.

While home equity may be a stagnant wealth waiting to be explored, there good and bad ways to your equity, whether you plan on taking a Home Equity Line of Credit or a Cash Out Refinancing, it is worth knowing what the best and worst ways to use your equity.

Home Improvement and Repair

One needs to make sure your house is in excellent condition. It doesn’t matter if you have a plan on selling the house soon or not. One needs to make sure your home is in tip-top shape. By tapping on your equity, you can fund your home repair and maintenance projects.

Home improvement projects that can potentially bring high ROIs are another way to make the best use of your equity. By using the funds to improve your home, its value rises over time. It is perfect if you plan on selling your home but wants to increase its value beforehand.

Good Read: 10 Home Renovations With the Best Return on Investment

Fund an investment or real estate

Tapping on your equity is an excellent way to fund a real estate purchase, to start a business or buy stocks. However, one should be careful when using your equity for such reasons as there is no easy and definite way to make sure your new investment will succeed. If you’re already in massive debt, it would be best to think twice before adding in another loan as you might put additional risk and lose your home in the process.

Funding luxurious things

Going on a luxurious cruise or buying a new car can be fun and exciting. However, one of the basics of a HELOC and Texas cash out loan rules is that you only use your equity for things that matters and stuff you can afford. Going on your dream vacay won’t give you any return on investment, and a car will depreciate in value. It would be best to use the funds elsewhere where you can benefit in the future.

Debt Consolidation

If the interest fees of your credit cards skyrocketed due to unpaid or late bill payments, then it would make perfect sense to apply for a HELOC or Cash Out Refi. Using your home equity can save you thousands of dollars. Just make sure not to acquire more debt in the future. Minimize spending and pay your dues on time.

Good Read: Should I Consider Loan Consolidation?


Some people did use a home equity loan for the sole purpose of gambling. Be it funding lottery ticket buys or a gambling trip to Vegas, this is one of the worst ways to spend your equity. It is not worth putting your home at risk in exchange for something you have minimal chances of winning. You can end up having to pay for the loan for the next ten years or so instead of letting it grow or using it for better things.