Debt Consolidation Home Equity Loans
Do You Have Debts?
Consolidating your debt in a single low-interest loan can save on interest payments and speed the process of paying off debts.
If you have a mortgage on your property it is probably your biggest debt.
Most people, however, have more than one debt. You may have high interest credit cards,
personal loans or other debts. To pay off one debt you may need to borrow from someone else,
creating yet another debt. If you are managing your debt successfully you would probably not
be reading this page. If not,
the solution to this problem could be a debt consolidation home equity loan.
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What is a Debt Consolidation Home Equity Loan?
A debt consolidation home equity loan is a secured loan where your property will be
security against the loan. The lender will have a lien on your house until you pay off the
home equity loan in full. While you'll continue to own your home as loan collateral, the
debt consolidation loan will keep the creditors away and keep you out of bankruptcy.
You may even be able to save a little because the single monthly payment will be
less than the total of the ones you had before.
With a home equity loan you will be able to consolidate each of your high interest credit
cards, as well as your consumer loans, into one affordable monthly payment.
The first thing to do once you've obtained your debt consolidation loan is to look over
your use of your credit cards, so that you don't use any of them in times of temptation,
thereby increasing your debt. This will definitely put you right back in hot water.
Tax Deduction
Another possible advantage is that the interest you pay on your debt consolidation
home equity loan may be tax deductible. If you add your first
mortgage to a new debt
consolidation loan, and the total does not exceed 100% of the appraised value of your
property, the interest you pay will usually be fully deductible. Your tax consultant can advise
you on this matter and it's always a good idea to check with him or her.
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Credit Report
Your credit history determines which loans you qualify for and the interest rate you pay.
Take control of your credit by checking both your credit report and credit score. Obtain your
free credit report. See our
credit report information page.
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Things To Consider
Before you sign on the dotted line be sure that the costs of the new, bundled, loan will
actually be less than what you're already paying various creditors. For many consolidation-loan
candidates their current credit woes mean they won't get the lowest available interest
rate. Plus, when there is nothing to secure the loan (such as your home), expect the lender
to increase the rate.
Calculate interest and fees on all your existing accounts to determine the total of the
payments you now make. Then compare those amounts with the consolidation loan repayment figures
to make sure it truly is a better choice.
Credit Counseling
If you are experiencing problems with debt, including
mortgage arrears and
late payments on your personal loans
you may wish to discuss your position with a
credit counselor
Remember, your home may be at risk if you do not keep up repayments
on a
mortgage
or other loan secured on it
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