| Research result shows that credit card debt is the | | | | refinance your existing mortgage to get $112,000 of |
| main debt problem for most of debtors. Credit card | | | | new loan to pay off your existing mortgage plus the |
| carries high interest rate, if you continue delay your | | | | credit card debt. |
| credit card payment or continue to pay only the | | | | Home Equity Loan |
| minimum due amount, it will quickly roll up the total debt | | | | Home equity loan is a second mortgage which you |
| and drag you into a serious debt trap. Hence, credit | | | | use you home equity to pledge for a loan. For |
| card debt must be resolved fast to avoid making your | | | | example, your home market value is $150,000 and you |
| debt situation worse. If you have build up your home | | | | still owe for a mortgage of $100,000; this means you |
| equity, you are at a good position to get your debt | | | | have a home equity equal to $50,000. You can apply |
| issue resolve by consolidating your credit card debt | | | | for a home equity loan up to the value of home equity, |
| and other high interest debt with your home equity. | | | | in this case is $50,000. But normally, lenders will only |
| Why consolidate debt using your home equity? | | | | approve a home equity loan up to 80-85% of your |
| There are at least 3 good reasons to consolidate all | | | | home equity. |
| your debt with home equity: | | | | Home Equity Line of Credit (HELOC) |
| 1. Lower interest rate. As compare to other loan, home | | | | Credit card has credit limit so do the home equity line |
| equity loan is comparatively much lower that other | | | | of credit, the difference between these two is home |
| loans, which make it easier to be paid off. If you | | | | equity line of credit use your home equity as the |
| continue repay the same amount you pay now and | | | | revolving line of credit. Based on your home equity, |
| the interest rate has been lower, meaning that you pay | | | | lenders will pre-approves you with a credit limit where |
| more toward the principal and making your debt to be | | | | you can withdraw the amount up to that credit limit. . In |
| paid off faster. | | | | the home equity line of credit, interest only count on the |
| 2. The interest of your home equity loan is | | | | amount being draws out. |
| tax-deductible; you save on interest pay for home | | | | What You Should Not Do With Your Home Equity |
| equity loan from the tax-deduction. | | | | Although home equity is a good option to resolve your |
| 3. Lower monthly payment. If you find hardship | | | | debt issue, but you will put your home at risk if you |
| repaying your current debt repayment, then selecting | | | | default the home equity loan repayment. Hence, don't |
| longer repayment term with a home equity loan will | | | | get the loan up to the maximum value of you home |
| help to lower the monthly payment so a level that is | | | | equity can provide you because you are adding more |
| affordable by your current financial situation. Be aware | | | | debt into your account by doing that. Use your home |
| that by taking long period of loan term, you will be | | | | equity to apply for loan that enough to repay your |
| paying more in total interest. | | | | consolidated debt. And remember to repay the home |
| Consolidation Debt Using Home Equity | | | | equity loan on time so that you won't lose you home |
| There are three ways to consolidation debt using | | | | because of foreclosure. |
| home equity: Cash-out Refinance, Home Equity Loan | | | | In Summary |
| and Home Equity Line Of Credit. | | | | You can always convert home equity to pay off your |
| Cash-out Refinance | | | | consolidated high interest debts and save with lower |
| In this method, you are getting a new mortgage with | | | | interest and lower monthly repayment. But be aware |
| the amount high than your current mortgage and use it | | | | for the risk of losing your home if you fail to make |
| to pay off your current mortgage and have enough | | | | repayment. Hence, you need to put your repayment |
| balance to clear your credit card debt. For example, | | | | plan in place to ensure you won't miss any repayment |
| your existing mortgage still remains $100,000 and you | | | | schedule of your home equity loan. |
| owe credit card debt of $12,000; you will need to | | | | |