Quote:
Originally Posted by Rain Man
As a financing option, home equity loans are a great thing because their interest is deductible. So if you can get the same rate on a home equity loan as another type of loan, you're much better off getting the home equity loan.
The key, of course, is why you're getting the loan in the first place, but if it's a bad reason for a home equity loan it's probably also a bad reason for any other type of loan. Home equity loans in and of themselves are a good thing, though.
The pros:
Tax-deductible interest
Makes tied-up wealth into a liquid asset
You can get a home equity line of credit instead of a loan, which means that you can use it in the future without startup costs. You should go the Line of Credit route instead of just a loan if the interest and costs are the same.
The cons:
If you get upside down in the house (value < 1st + 2nd), you're hosed if you try to sell the house.
It's easy to psychologically not worry about the loan and spend the money on stuff that's going to be worthless and then you're paying on your house forever.
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Depends on what you do with the money, I'd say. But mostly Rain Man has it nailed down.