Home Equity Loans and Debt Consolidation – A Great Partnership

 


Visitors: 418

Home equity loans offer several attractive benefits for debt consolidation. First, you are moving your debt from a host of different lenders to one lender with a lower interest rate. You will also be paying off one lump sum in a fixed time-frame, instead of paying various lenders various amounts on differing payment schedules. In addition, the interest on a home equity loan is tax deductible. Finally, in most cases, less money will be coming out of your bank account each month to pay off your debt.

In a recent article on Bankrate, Greg Pahl, co-author of “The Unofficial Guide to Beating Debt, ” states, “A home equity loan can be an extremely useful strategy if it’s used properly, but people must have their eyes open and understand the implications. ” You need to remember that your home is the collateral for the loan, so there is a great deal at stake. For this reason, many homeowners opt for a home equity loan versus a home equity line of credit when looking to consolidate debt. A home equity loan is a lump sum loan for a fixed period of time, while a line of credit works in the same way as a credit card or checking account, making it tempting to continue to borrow money against your home. A home equity loan is a more secure choice for many homeowners.

What about refinancing? When you refinance, you are replacing your existing mortgage, not just borrowing against the equity in your home. This means that you would pay interest on your credit card and other debt for the entire length of your mortgage. A home equity loan is typically a better option when debt consolidation is your goal.

Jennifer is a free-lance writer who has produced many mortgage related articles for Mortgage Refinance Quotes & Second Mortgages . If you need more information or current home equity rates, please visit the Home Equity Loans Center .

(335)

Article Source:


 
Rate this Article: 
 
No Equity Loans and HELOCs For Debt Consolidation
Rated 4 / 5
based on 5 votes
ArticleSlash

Related Articles:

Debt Consolidation Home Equity Loans - Reduce Debt and Improve Credit Score

by: Paul Sarwana (July 16, 2008) 
(Finance/Home Equity Loans)

Home Equity Loans For Debt Consolidation

by: V. Jain (January 07, 2006) 
(Finance/Mortgage Refinance)

Debt Consolidation, with Home Equity Loans

by: John Whiteside (September 10, 2005) 
(Finance/Debt Consolidation)

Debt Consolidation Home Equity Loans - Best Way to Reduce Debts

by: L. Sampson (July 25, 2006) 
(Finance/Mortgage Refinance)

Bad Credit Debt Consolidation Home Equity Loans

by: Gressly Stevens (July 15, 2008) 
(Finance/Debt Consolidation)

Advantages and Disadvantages of Debt Consolidation Home Equity Loans

by: Gibran Selman (September 02, 2006) 
(Finance)

Debt Consolidation Financing - The Pros and Cons Of Home Equity Loans

by: Ian Wilkie (August 14, 2007) 
(Finance/Debt Consolidation)

Debt Consolidation Solutions with Fixed Rate Home Equity Loans

by: Nick Rian (August 02, 2006) 
(Finance/Debt Consolidation)

Bill Consolidation Tips: Best 2nd Mortgage & Equity Loans for Debt ..

by: Maria Ny (July 10, 2006) 
(Finance/Debt Consolidation)

No Equity Loans and HELOCs For Debt Consolidation

by: Sharon Listner (January 08, 2007) 
(Finance)