Argument: Home equity loans can feed a risky & damaging cycle of debt

Issue Report: Home Equity Loans Pros and Cons


“The Pros and Cons of a Home Equity Loan”, Lending Tree, March 26, 2017: 

“The major disadvantage many people don’t consider is that home equity loans feed the cycle of debt. Think about it. You spent all this time paying off your debt to build some equity in your home, only to take that money out and borrow against it again. At the end of the day, you’re not really ahead. You borrow so you can spend and the habit of spending sends you deeper into debt. If you’re going to do this, it better be for an important reason.”


“Best Cash-Out Refi & Home Equity Loans 2017”,, June 13, 2017:

“The main issue with home equity loans is maintaining a cycle of debt, in which borrowers spend, borrow, and then continue to spend irresponsibly.”


“Home Equity Loan”, Investopedia: “The main problem is that home-equity loans can seem to be an all-too-easy solution for a borrower who may have fallen into a perpetual cycle of spending, borrowing, spending and sinking deeper into debt. Unfortunately, this scenario is so common the lenders have a term for it: reloading, which is basically the habit of taking out a loan in order to pay off existing debt and free up additional credit, which the borrower then uses to make additional purchases.”