Home Equity Loans in Changing Real Estate Markets

By Karen Lawson
LoanPage.com Columnist

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You've heard plenty about home equity loans. You can use your home equity to pay for everything from college tuition to exotic vacations. Today's real estate market trends can impact your equity, so it's important to consider your motives for getting a home equity loan.

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I Owe, I Owe: Using Home Equity for Debt Consolidation

Many of us carry credit card balances from month to month. Interest charges add up, and it seems impossible to get out from under credit card debt and consumer loans such as car and furniture payments. A home equity loan can be used for debt consolidation, and it's often possible to do so at a much lower interest rate while potentially gaining tax benefits. This can be a great way to manage debt, but if you accumulate credit card balances again, you'll find yourself with a larger mortgage and more debt. Before taking out a home equity loan, you'll want to review your income and financial obligations, and make a plan to avoid carrying balances on credit cards and loans.

Tapping Home Equity for Education

The Department of Education offers a number of federal student loan programs that are presently available at low interest rates. Instead of encumbering your home equity, federal student loan programs can provide funds for post secondary education. If you have a great deal of equity in your home, a home equity loan can provide funds for educational expenses.

You Can't Always Get What You Want

You havent had a vacation since your honeymoon. Your car is falling apart one piece at a time. Your daughter has fallen in love with a purebred puppy that costs as much as your mortgage payment. Depending upon your home equity, financial situation, and goals for the future, you may want to think twice before using your home equity loan proceeds for a splurge. If you are concerned about real estate markets or have other financial worries, it's important to carefully consider how you will use your home equity loan.

About the Author
Karen Lawson is a freelance writer who has more than fifteen years of experience in mortgage banking. She holds an MA degree in English from the University of Nevada, Reno.

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