Not to long ago, I spoke with William Jordan, a Laguna Hills Financial Advisor with Sentinel. He pointed out that even now, with home values falling, it might be a good time to use your home equity.
But not for just anything. Credit cards and vacations are out.
"Taking money out of your home depends on your reason. For consumer purchases or spening, it's rarely a good time to do that...But if you are taking the money out for investment -- like cash to buy other real estate or to diversify your portfolio -- it can nearly always be a good time," Jordan says.
Jordan also points out that it doesn't pay to get too worked up about negative equity in these situations, as long as you keep the long view in mind. "If you're going to be in the house for 10 years, it makes more sense than if you are going to move in two years. No one really disputes that your house is going to be worth more in 10 years."
Instead of focusing on negative equity, think about your debt load, Jordan advises. "If you can handle the payments, and if you can make investments that make up some of the difference, then you should consider using the equity in your home. This is especially true in a declining real estate environment."
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