Homeowners should consider consolidating their high interest bills and debts with a home equity loan with a fixed mortgage rate that can save you money immediately. Anyone that is faced with a large amount of high rate debt due to credit cards should look at a home equity loan as a possible solution. If you have enough equity and adequate credit scores, most qualified homeowners can get a home equity loan.
Debt consolidation through a home equity loan offers many advantages that you probably won’t get with other types of bill consolidation plans. A home equity loan is the best way to get a substantial amount of cash to pay off your bills and put you in a better financial situation. Home equity loans generally have a lower rate, and there is tax benefits associated with home equity mortgages if you meet the eligibility requirements with the IRS.
Do Your Homework and See If Consolidating High Rate Unsecured Debt Could Save You Money When Refinancing it into an Equity Loan!
A home equity loan is basically a second mortgage. The current equity that you have in your home is used as collateral. Home equity loans are considered to be a secured loan, because the loan is offered against the home that you own. Home equity loans with bad credit come in many shapes and sizes, and it is not difficult to find one that will work for you. The important thing to remember before considering your options is to understand your personal financial goals for the short term and long term.
For instance, you can choose from fixed rate home equity loans, adjustable rate equity loans, or a revolving home equity line of credit. Fixed rate home equity loans offer a low fixed interest rate, which makes them very attractive to pay off adjustable rate credit card debt because the rate is usually lower than the rate of the credit card debt.
Another advantage of using a equity home loan to get rid of that credit card debt is that the interest is tax deductible. This does not work for everyone who takes out a home equity loan, however. According to Liz Pulliam Weston in “5 Tips for Wisely Tapping Your Home Equity,” you must be able itemize your deductions, and you must borrow less than $100,000.
All home equity loans are not created equal. Shopping around to get the best home equity rates is important. The first place to start looking is through your current mortgage company, but you can check with various mortgage companies and brokers to get a better rate or a loan that is more suited to your debt consolidation needs. Remember that your home equity is an asset, and if you have high rate interest credit debt, you also need to address the issue of overspending that got you there in the first place. Still, a home equity loan is a good option when looking to pay down that debt and you may even end up with cash out of the deal to spend as you choose.
Article written by By Christena Palmer