Kentucky Home Equity Loans – Pros and Cons of Home Equity Debt

Home prices in Kentucky have increased at an abnormally fast pace over the last few years. This is bad news for homebuyers, but great news for Kentucky homeowners–especially those who wish to borrow from their equity.

If you are one of the many people who are thinking about getting a Kentucky home equity loan, you will want to evaluate all of the pros and cons of equity debt before you take any action.

Pros of Home Equity Debt

Homeowners who need large amounts of cash have a leg up over non-homeowners. Borrowing from home equity is one of the fastest and easiest ways to get money for debt consolidation, home improvements, and other big ticket items. Some of the other pros of home equity debt include low interest rates and tax deductible interest payments.

A Kentucky home equity loan is usually best for people who are confident in their ability to make the payments or for those who desperately need the money and have no other means to get it.

Cons of Home Equity Debt

As easy as dipping into your equity is, a Kentucky home equity loan may not be in your best interests. If you default on the loan, you could lose one of your biggest assets–your home. Default worries aside, you also run the risk of home prices declining. Several years after taking out a home equity loan, you could end up owing more on your house than it is actually worth, a situation that nobody wants to be in.

Home equity debt tends to be most dangerous to young people who aren’t established in their career and have limited experience owning a home and managing money. It can also be rather risky for older homeowners who are close to retirement.