During the long-ago period of ever-rising home prices–
You: Wasn’t that, like, three years ago?
Indeed. Crazy, right? Seems like most people forget that prices haven’t been going down for that long. Anyway, one interesting phenomenon of the boom period was the homeowners nearly real-time use of that appreciation.
You: How is that even possible? How do you spend the increase in the value of your home without selling it? Besides, even if you sold it, wouldn’t you need another home, which presumably would require just about all of the money you made on the home you just sold?
Easy. Just borrow against it. You can do this via a home equity loan or a home equity line of credit.
You: Is doing so a good idea?
Glad you asked. James Geary wrote an extensive and entertaining primer on this topic, titled “How to Handle Home Equity” for which I was interviewed. I think you’ll find it informative and occasionally thought-provoking. Feel free to share your thoughts below, especially if you have an opinion on using home equity, either from personal experience or based on your future intentions.
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