You’ve heard it before. Your home is a valuable tool for your financial future. The powerful tool in your home is the equity you’ve built as you’ve paid your mortgage. This tool can be a good thing when you sell your home. It can be used for a down payment on a new home. It can also be used for debt consolidation secured loan.
If you are pulling the equity out of your home to pay down credit card debt, it’s important to think about whether this is your best option.
When you use the equity in your home to pay off credit cards debt, you are taking a big risk. This is what happened to many of the people in the financial crisis of the past few years. This crisis involved consumers taking the equity in their homes to pay down credit card and other debts. This led to a decrease in home values, and many consumers ended up in negative equity situations or upside down in their mortgages.
Debt consolidation secured loans are not for everyone. The require certain circumstances, a certain amount of debt and positive home equity.
Even if have a large amount of debt, especially more than the equity in your home, it’s still possible to pay these debts off. It’s just going to take time and discipline. It may involve selling your home and taking the equity to pay down a large amount of the debt.
The benefit to the debt consolidation secured loan is that your interest rate is lowered because you are securing the debt. Another benefit is that this loan has a fixed term. You will pay a single payment for a determined number of months or years and be free of the debt.
If you are considering this type of loan, be sure you are planning to be in your home for a while. Also, be sure you are comfortable with tying up your equity. If you can use discipline and not get more debts, you can get out of the mess of credit cards and other revolving credit lines once and for all. Good luck!