Using Your Home’s Equity To Consolidate Debt – Home Equity Loans For Debt Consolidation
Before you take out a second mortgage or a home equity loan to consolidate your debt. Consider these points before you refinance or take out a home equity loan to pay off debt:
1. Are the credit cards you are refinancing low interest? – If they are, you might want to consider waiting and paying off the credit card debt separately. Mortgage debt is stretched out over many more years than some credit card payments would be. You could end up paying more over time for your credit card debt than if you moved it to your mortgage loan. If your credit cards interest rate is reasonable or low, consider keeping the debt on your credit card until it is payed off.
2. If you refinance your credit card debt into your mortgage loan, it can become tax deductible. – If you refinance high interest debt into your mortgage loan, the savings to you could come in the form of tax deductions. Calculate the numbers considering your tax savings and see if that tips the scales for you and makes it worth refinancing.
3. Are you going into debt to finance a home...
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