Rumor has it that since more people are living in homes with equity that more homeowners are going to feel more confident about the economy and take out home equity loans.  I caution those considering doing this to think twice.  Think back about 7 or so years ago to when the housing market was booming.  When many couldn’t see an end to rising home prices in sight.  When many took out home equity lines and second mortgages for purchases like new cars, new boats, lavish vacations, investment properties and the like.  We all know what happened after that.  In fact, most of us are still feeling it.

Are all home equity lines bad?  No.  Not if you want to remodel your kitchen, update your bathroom or upgrade your flooring.  Projects like this should give a return on the investment – not 100% though.  If you are planning a home renovation, do it because you want to.  Do it because you will get pleasure out of it and enjoy it.  Don’t do it for the dollar signs….no home improvement project that I know of will give 100% return on the investment.

So please, I beg you, if you are considering taking out a home equity line of credit or a second mortgage now that your property is in the black again, please think twice.  We saw what happened a few years back when everyone was spend happy and not considering the what ifs.  Choose wisely, spend smartly, and ask yourself at least 3 times, Do I really NEED to do this?