Home equity loans are often promoted by banks and other financial institutions as a great solution to your short-term financial problems. It seems so simple — you use the value of your home to quickly get money that you can use for whatever it is you’re wanting to do with it. Travel? Paying off other debts? Home improvements? You name it, a home equity loan is pitched as the solution. This is particularly true at the current moment when home equity loan interest rates are at record lows, but before you fill your coffers with a home equity loan, consider the drawbacks and questions you need to ask yourself.
A home equity loan is not devoid of risk
Home equity loans are often presented as creating minimal risk for the person taking out the loan. You simply sign on the dotted line, get a big pile of cash to do whatever it is you’re intending to do, and then you pay it off with a series of relatively small payments over the coming years.
The problem with this pictu… Read More