Home equity has become one of those financial topics that people either swear by or completely reject. The stigma is real. Some think that tapping into home equity is reckless, while others understand that, when used wisely, it can be one of the smartest financial moves you can make.

Let’s be clear – there are legitimate concerns. If someone isn’t financially responsible and takes out a home equity loan or HELOC just to fund an extravagant lifestyle they can’t afford, that’s a problem. Borrowing money for impulsive spending or unnecessary luxuries … that’s how people dig themselves into holes they can’t climb out of.

But here’s what gets overlooked: Home “equity,” on its own, does nothing for you in the short term. It’s just sitting there, locked away in your home until you decide to sell – maybe 15, 20, or 30 years down the road. Meanwhile, life happens. You have financial goals. You have opportunities. You have expenses. So, it boils down to people just being fearful of leveraging their home.

The wealthy certainly aren’t afraid of it. In fact, they depend on it. Elon Musk, Jeff Bezos, and countless other ultra-rich individuals rarely sell their biggest assets. Instead, they borrow against them. Why? Because they understand that leveraging existing assets is one of the best ways to build more wealth. If billionaires do it with their holdings, why should homeowners feel guilty about using home equity responsibly?

Yet, some financial “experts” act like home equity is taboo. They’ll warn you about the dangers of borrowing against your house as if it’s some sort of financial sin. But let’s be real – what’s more dangerous – Using a home equity loan at a reasonable interest rate, or carrying a mountain of 29% credit card debt? It’s not even close.

Think about it. If you’re sitting on a home worth $750,000 with $350,000 in equity, that money isn’t doing anything for you today. It’s not earning interest. It’s not helping you improve your financial circumstances. It’s just sitting there, stuck in place. The home will appreciate the same way regardless of how much you owe on it. Meanwhile, you might have outstanding debt at high interest rates, business opportunities you can’t fund, or significant expenses that could be managed more efficiently.

Let’s say you take out a HELOC at 7.5% interest and invest that money into an asset that earns an average annual return of 10%. That 2.5% difference might not seem like much in the short term, but it adds up nicely over time. With compounding, a 10% return on an investment doubles your money in about 7.2 years. After 15 years, a $100,000 investment could grow to over $417,000 – even after paying 7.5% interest on the HELOC. That’s the power of leverage.

Does that mean you should drain your home of every last dollar? Of course not. Home equity is a tool, not a free-for-all spending spree. But when used strategically – or even for creating additional revenue streams – it can be a game-changer.

The key is understanding the difference between good debt and bad debt. Borrowing against your home to pay off credit card balances at nearly 30% interest? Smart move. Using a HELOC to renovate your kitchen in a way that increases property value – often makes sense. Taking out a loan to buy a flashy new car you don’t really need? That’s where people get into trouble.

At the end of the day, financial decisions should be based on strategy, not fear. The stigma around home equity borrowing has caused many people to overlook a powerful financial resource that could actually improve their situation. The reality is, your home is an asset – and like any asset, there are ways to use it wisely. Every financial situation is unique, and the right approach depends on your specific goals and circumstances. Feel free to reach out to discuss your situation.

Would you rather have your home mortgage-free or with a mortgage that’s paid off from rental properties you bought with that debt? Please let me know if you have a good “Would you rather” question, and we will highlight your submission.

Shmuel Shayowitz (NMLS#19871) is a respected Real Estate & Finance Executive, Writer, Speaker, Coach, and Advisor. As the President and Chief Lending Officer of Approved Funding, a leading national mortgage banker and direct lender, Shmuel has facilitated over $3 billion of mortgages over the past two decades. Shmuel’s expertise spans various licenses and certifications, including specialized mortgage underwriter, licensed real estate agent, and accredited coach. His market insights and experience are highly sought after in the real estate, finance, and coaching industries. In addition, Shmuel is a seasoned real estate investor and property manager, facilitating thousands of rentals nationwide. Shmuel can be reached at www.approvedfunding.com/shmuel.