"Tapping Home Equity"

I have to say that everytime I hear those words, "tapping equity", I have to laugh. The lending industry has come up with a clever way of making it sound like you are simply taking profits on an appreciated asset, as if it were akin to taking profits in a stock account.

In reality, nothing could be further from the truth. You are simply taking out a LOAN against the equity you have built up in your house. You could take a loan against your stock account if you wanted, but not many people due (I know the terms are less attractive, but I am just making a point).

My point is that it doesn't really matter how much your house has appreciated. If you take a loan against your "equity", you have to pay back that loan with interest. And while you might feel richer because your house has doubled in the last several years, unless your income has doubled also, it isn't going to be any easier for you to make those loan payments.

I think it is a poor decision in nearly all instances. Unless you though you could put the money into something wherein the investment returns would far surpass your cost of the loan. But these days, there aren't many options available.

At least...that's how I see it.

(* If you have one of these loans, I would love to hear from you)