Borrowing Wisely Against Your Home Equity

Released  June 26, 2006
By Megan Greuling

CHARLOTTE, N.C., June 26, 2006 – If done wisely, borrowing against your home equity can be a great way to obtain a low interest loan. That said, home equity loans do carry some risks, so be very careful in analyzing the exact reasons for obtaining one.

“Home equity borrowing is one of the easiest, most accessible forms of credit, but it is important to understand how to use your home equity wisely,” states Anthony Hsieh, president of “If you obtain a home equity loan for good debt such as sending a child to college or making improvements to your property it can provide you with an asset worth more than the loan you obtained. And, using a home equity loan to consolidate high-interest credit card bills can be a great strategy, as long as you don’t go back out and spend more on those cards.”

As part of its ongoing mission to empower borrowers, LendingTree offers the following tips about building equity in your home and using it wisely:

Building Equity

  • Make a bigger down payment to pay off your mortgage and build equity faster.
  • Pay off the interest as quickly as possible. Under an amortization schedule, interest is higher in the beginning of your loan term.
  • Try to make additional principal payments if your mortgage lender allows it.
  • Be aware of prepayment penalties that some mortgage lenders charge for repayment of the loan in the first few years. This can make the cost of refinancing prohibitively high.

Use Home Equity Wisely

  • Make home improvements that increase the value of your home.
  • Consolidate high-interest debt with a low-interest home equity loan to smartly plan your way out of debt, especially when the interest is tax deductible.
  • Pay for college or other major expenses using your equity to help spread the amount rather than struggling to come up with a one-time cash payment.
  • Be careful not to tap your home equity for daily expenses, impulse purchases or to pay off debt on a credit card that you continue to use.

To learn more about borrowing wisely against your home equity, please visit the LendingTree Guide to Smart Borrowing.

About LendingTree, LLC

LendingTree, LLC is the nation’s number one online lending exchange, providing a marketplace that connects consumers with multiple lenders that compete for their business. Since inception, LendingTree has facilitated more than 18 million loan requests and $141 billion in closed loan transactions. LendingTree provides access to mortgages and refinance loans, home equity loans/lines of credit, auto loans, personal loans, and credit cards via and 800-555-TREE.


Founded in 1998 with headquarters in Charlotte, North Carolina, LendingTree, LLC is part of IAC Financial Services and Real Estate, an operating business of IAC/InterActiveCorp (NASDAQ: IACI), which also owns or operates LendingTree Loans, LendingTree Settlement Services, LLC, GetSmart®,®, Domania®, and iNest®.