Can Home Equity Loans Help Me Get Out of Debt?
Debt Consolidation Mortgage Loans
- The Upside
If you have considerable equity in your home and are comfortable using that equity as collateral, you may be able to get a debt consolidation mortgage loan. Signing up for a debt consolidation mortgage loan can offer several substantial advantages:
- Debt consolidation mortgage loans have significantly lower interest rates than most credit cards or personal loans, saving you hundreds of dollars.
- You can avoid the late fees attached to credit cards if you’ve been having trouble keeping up with the numerous bills.
- Interest payments on a home equity loan are tax deductible up to $100,000 on your yearly Federal return.
Debt Consolidation Mortgage Loans
- The Downside
When you use a debt consolidation mortgage loan as a personal debt consolidation solution, you are putting your home on the line. If you get yourself back in debt, and suddenly you can’t make that monthly home equity debt consolidation loan payment, the bank could foreclose on the mortgage loan and take away your house. Also, debt consolidation mortgage loans are more of a long-term commitment than your credit card bills, and will take at least several years to pay off.
Will I Qualify For A Home Equity Debt Consolidation Loan?
Even if you own your own home, there's no guarantee that you can obtain a debt consolidation mortgage loan. If you’ve only recently purchased the place, you probably don’t have enough equity built up as of yet, unless you made a large down payment. If you’ve owned your home for a few years, however, and put at least $5000 down, you should have enough equity between the payments you’ve already made and the appreciation of the property’s value to take out a home equity debt consolidation loan. The mortgage lender will usually determine what the actual equity in the house is after having an appraisal done (although an appraisal isn't always necessary).
Debt Consolidation Mortgage Loans
- A Final Warning
If you do opt for a home equity debt consolidation loan to consolidate your credit card debts, use all your willpower and close your credit card accounts. If you just pay off the balances and immediately begin racking up debt on the cards again, this time you could lose your house!
Is a Debt Consolidation Mortgage Loan for You?
If you have the self-control to cut up the credit cards and have enough equity in your home to take out a debt consolidation mortgage loan, the debt help from taking this route can:
- save you the cost of credit counseling service fees
- net you some cash for small home improvements or other incidentals you may have been putting off
- help salvage your credit rating
- give you large tax advantages come April 15th
Carefully weigh your commitment to balancing your budget against your spending impulses to determine if using a home equity debt consolidation loan is the right debt consolidation route for you. Sign up to talk to a debt consolidation mortgage lender today.
For more information on Debt Consolidation Mortgage Loans, contact:
