Going on vacation or buying electronics: Hard no. Real estate is a long-lived asset that will give you years of use and almost certainly gain value.Federal loans have lower rates and more safeguards around financial hardships, so there’s no hurry to pay them down. In contrast to federal loans, private student loans carry higher rates and less flexibility. If you owe student loans from private lenders, it can make sense to pay those down by tapping home equity. Paying down student loans: Maybe. This one is a bit of a gray area.However, using a home equity line of credit at 7.5 percent today probably isn’t ideal. Investing: Probably not. Tapping home equity at 3 percent to fatten up your retirement savings made sense. Otherwise, you’ll have the unfortunate combination of less home equity and an overhang of credit card balances. This strategy comes with a big caveat, however: Pull cash out of your house to pay off the credit cards only if you’re not going to simply run up more debt.
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