With record-high home equity and declining mortgage rates, the temptation to do a cash-out refinance is growing. I’ve certainly considered it myself. However, after careful reflection, my conclusion is that it’s probably not the best move.

Having written about refinancing since 2009, I’ve seen too many unfortunate cases where people took out a Home Equity Line of Credit (HELOC) or did a cash-out refinance, only to harm their overall financial health. The urge to spend on unnecessary things was simply too hard to resist.

The less debt you carry, the better. Ideally, you want to finish your working years debt-free, so you can enjoy a financially stress-free retirement.

A cash-out refinance increases your debt load and heightens the risk of falling behind on your financial goals. As we get older, time becomes our most precious resource, and moving backward financially only costs us more of it.

My Master Plan

Keep reading this article on Financial Samurai.