How many times in your life have you seen the metaphor of the angel and devil sitting on a person’s shoulders? Between the cartoons of your youth, the many movies you’ve seen over the years, or the books you’ve read, the diverging advice given by those angels and devils always puts the protagonist in a momentary struggle in choosing between right and wrong.
For homeowners on the last legs of their mortgage or ready to pay it off in full, that example of the angel and devil is undoubtedly appropriate. While your home is likely one of the most significant assets in your overall portfolio – if not the biggest – your mortgage has been equally significant to your finances, just as a burden rather than a blessing.
If you now find yourself on the backend of that burden and being faced with the constant temptation of using that equity to your benefit, it’s in your best interest to pause for a moment and look at the bigger picture. In other words, think of those metaphorical angels and devils sitting on your shoulders to help you make a financially responsible decision, but also allow you to enjoy life.
Do the Math
Of course, not all of the possible uses for the equity in your home are created equal. In fact, being a bit quantitative in your decision-making can go a long way in helping you decide if tapping your hard-earned equity makes financial sense. For instance, if you find yourself saddled with a significant amount of high-interest debt – most often in the form of credit cards or personal loans – some basic math will probably reveal that you will end up with more money in your pocket down the road if you were to use your equity to pay off that debt.
Think About What’s Most Important to You
Also, remember that what might be a good decision for your friend or neighbor might be terrible for you. Everyone has different levels of risk aversion and need for financial safety. Therefore, it is incumbent upon you to make financial decisions that suit you and your specific situation. In other words, if renovating your home using your equity as funding allows you to significantly enhance your quality of living and overall happiness, then maybe it’s the right decision for you.
However, no matter what you prioritize in life, always be deliberate and meticulous with your planning and thought process to make sure you don’t make any decisions that will haunt you in the future.
Contact me today if you would like to see whether or not utilizing your home’s equity can make sense in your situation! Simply click here or call (763) 445-2772 to schedule a time to chat.