Benefit If you are a homeowner and have equity in your property you may want to consider a home equity loan or home equity line of credit to consolidate your debt.Interest paid on a home equity loan or line of credit may be tax deductible. A bad credit history can follow you for years, making it difficult for you to borrow money when you need it. Now, let’s start reducing your debt and getting rid of those high interest rates.
With interest rates on credit cards often ranging from 12-18 percent, that can produce a real savings.
A Debt Consolidation loan is an unsecured loan similiar to a Personal loan and does not require any collateral like an auto loan or mortgage.
Debt Consolidation is often advisable in theory when someone is paying credit card debt.
"I would only suggest this as a last-gasp strategy," says Susan Reynolds, author of "One-Income Household." "In general, rolling credit card debt into mortgage loans is not a good idea. If you renege, they can pester you for payment and ding your credit report, but they cannot confiscate your home." Todd Huettner, president of Huettner Capital, a mortgage brokerage specializing in debt consolidation, advises homeowners to answer three questions before rolling debt into a home loan: After working with nearly 5,000 families, Susan White of Plan Plus Inc.
You will pay significantly more in interest over the life of the homeowner's loan than you would if you chipped away at your credit card debt over a period of three to five years. has her own reasons for advising against rolling debt into home loans.
Debt consolidation combines several loans or debts — usually credit card debt — into one low payment. Managing your debt is not as difficult as you may think. A lifestyle change may be in order, but don’t sweat it. It takes getting used to, but as you move closer to life without debt, you’ll settle in and be able to move forward with your life. Combining several high-interest loans into one low, manageable payment can free up your cash. Let’s explore the strengths of each one, and match a debt consolidation loan to your individual needs. If so, you’ll want to consider a Cash-Out Refinance.