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Pay Off Adjustable Rate Credit: Debt Consolidation
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The numbers are downright frightening: the average American household carries more than $9,000 in credit card debt, and according to the Federal Reserve total revolving debt (read: credit cards) in America topped $907 billion half way through 2007.
Most people who owe the average - or more - on their credit cards find it hard to pay off the debt.
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Adjustable rate credit card debt continues to grow, even as you're paying on it, thanks to high interest rates charged by card companies. "Converting that debt into something with a lower, fixed rate, and then paying it off, is really the only hope for most people with high credit card balances," says Shanna Thompson, a New Jersey-based mortgage expert who has worked for Washington Mutual and PHH. Many opt for debt consolidation through loans with fixed interest rates - rates that are typically lower than those charged by credit card companies. If you are a homeowner with equity, however, cash out refinancing can actually turn your high interest credit card debt into debt that works for you - in the form of tax breaks.
Pay off your adjustable rate credit cards and consolidate debts with a fixed rate debt consolidation mortgage for increased savings!
"Home equity loans are great tools for consolidating high rate debt," says Thompson. "Not only does refinancing lock in a low, fixed rate on the debt, the interest on the home equity loan is tax deductible. The lower rate and the tax break are like a double reward for paying your debt wisely."
As long as you've maintained a good payment history on your current mortgage and credit card debt, you may qualify for fixed rate refinancing. Cash out refinancing can allow you to draw on your equity by borrowing up to 80% of your home's appraised value. Because you borrow more than you owe on your current mortgage, you are able to leave the closing table with cash in your pocket after repaying your first mortgage.
That cash can be used for credit card consolidation - turning high-interest debt that may seem to never end, into manageable debt that actually works for you while you pay it off.
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