Using Your Home's Equity to Consolidate Debt
Using Home Equity to Consolidate Debt
Would you like to pay off credit cards that have high interest rates? Lower your total monthly debt payments? Simplify your finances by combining many small debt payments into a single payment? Or perhaps you’d like to reduce the interest rate on your interest debt. In these instances, and others, you might want to consider using the equity in your home to consolidate your debt.
Here a several debt consolidation options to consider:
Cash-out Refinance: Refinance your mortgage to a loan amount more than you currently owe and take the difference in cash. Depending on your current interest rate, you may also be able to lower your monthly payment. And, you can cash to pay off other debt at the same time.
Home Equity Loan: Tap into your equity; turn your equity into cash without refinancing your first mortgage. Commonly referred to as a "second mortgage," a home equity loan makes cash available in less time than it would take to refinance your first mortgage.
Home Equity Line of Credit: You can get a home equity line of credit in as little as ten days. This is similar to a credit card except that it uses your home’s equity as the revolving line of credit. You pay only if and when you use the money.
If you increase your monthly cash flow by consolidating debt, you may want to think about using the extra money you now have to save or invest for retirement or to pay down your other debt faster.
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