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Should You Tap into Your Home Equity?

Real Estate Agent with Berkshire Hathaway HomeServices Preferred Real Estate, Inc.; www.AuburnOpelikaALRealEstate.com

Should You Tap into Your Home Equity?

Uncover the potential risks and rewards of tapping into your home equity. From understanding the best times to use your equity, to the pitfalls of other borrowing methods, it’s a nuanced exploration of financial decisions that shape homeownership.

When you put 20% down on a home using a mortgage loan, you own 20% and the lender owns 80%. As you make payments, most of the money goes to pay interest while some goes toward reducing your principal. Meanwhile, favorable market conditions may be increasing the market value of your home, giving you instant equity.

Equity is the amount of the home that you own, much like a savings account that pays interest on money you want to keep growing. After a few years, you may want to tap into that money to carry out home improvements, make a down payment on a second property, or pay off credit cards and other bills. Is it a good idea to use your equity?

The answer is this: you’re putting your home in deeper debt, so your reasons for using equity instead of another means of borrowing or consolidating must be worth the risk.

Home improvements are designed to add value to your home, a sure thing that will net you more money when you decide to sell it one day. Making a down payment on another home is riskier—as you’ll have two mortgages—but if you can afford it, you’ll have two properties potentially building equity.

Credit cards are unsecured debt so interest rates are high. Home equity loans are far less costly, so you could get much relief by paying credit cards off. However, you must avoid “reloading” the cards with new charges, which will take dedication and self-discipline.  Questions? Ask me today—I’m happy to help. #BHHS #BHHSRealEstate #HomeEquity

Posted by


Laura Sellers

Associate Broker, Realtor, GRI

Berkshire Hathaway HomeServices 

Preferred Real Estate, Inc.

1810 E. Glenn Avenue, Suite 130

Auburn, AL 36830

Phone: 334-332-7263

Fax: 1-888-217-3682w







If you are buying or selling  property in the Auburn - Opelika, AL  area, my team and I will provide you with the service that you need.  We're the #1 real estate company in Auburn's #1 office.  

Please call me today at (334) 332-7263.


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Michael Elliott
Fathom Realty - Burlington Township, NJ
Burlington, New Jersey Residential Sales

Been there, done that, now it is time to pay it off and relax a little bit.

Apr 14, 2024 06:03 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Laura and great information to share with us here in the Rain.  Hope you have lots of plans for today!


Apr 14, 2024 06:15 AM
Patricia Kennedy
RLAH@properties - Washington, DC
Home in the Capital

Hi, Laura!

I included this post in today's Last Week's Favorites. Thank you so much for writing it!  


Apr 14, 2024 08:28 AM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Laura,

I was glad to see Patricia Kennedy feature your post in her Sunday selections. I thought I read your post but realized it was another one of yours I read. Your answer to the age old question of tapping into your home equity was excellent, "it must be worth the risk."

Apr 14, 2024 08:40 AM
Leanne Smith
Dirt Road Real Estate - Golden Valley, AZ
The Grit and Gratitude Agent

This final comment is so on target:

However, you must avoid “reloading” the cards with new charges, which will take dedication and self-discipline

Apr 14, 2024 11:23 AM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

It’s kind of like, ask not what your equity can do for you but ask what you can do for your equity.

Apr 15, 2024 11:21 PM
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

The banker could not make her quota talked us taking a HELOC for 10 years at 2.5% interest. I finally decided to buy a condo fixed it and put on the market 1 year later for a tidy gain. Today no!

Apr 16, 2024 09:28 AM
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Equity can be a great source if the interest rate is low. I have also heard from retirees taking multiple HELOC for vacation, grandchildren schooling result in lose their home also. 

Apr 17, 2024 08:58 AM