Debt consolidation with home equity loans gives you maximum flexibility
Have you ever wondered how you can consolidate your debts and help you save money that is used to pay off those high-interest debts? You can lower your interest rate charges by using your home equity loan to consolidate all of your outstanding debts. Your home equity loan can be used to consolidate debt and pay the following bills:
- Credit card balances
- Gasoline card balances
- Balance sheets of department stores
- Installment loans
- Loans for cars
- Any outstanding account balance.
Home equity loans allow a homeowner to borrow money by pledging the home as collateral. This loan is usually easier to get approved by the lender even if you have bad credit because the lender considers the home equity loan relatively safe. And you can borrow a relatively large amount of money to pay off all or most of your other high-interest debt.
Home equity loans generally have a much lower interest rate than most credit cards and other unsecured loans. You can also set the repayment terms to a fixed rate so you can plan exactly how much you budget for each month. You also save time and hassle by writing just one check each month.
Most home equity loans have the following repayment terms:
- up to 5 years
- up to 10 years
- up to 15 years
- up to 20 years
Thus, you have the flexibility to tailor a debt consolidation plan that fits your budget. If your debt consolidation balance is high, you can plan on a long repayment period. With the longer repayment period, you’ll pay a lower monthly repayment and budget for other living expenses.
What are the things that save in debt consolidation?
Consolidating your debt with a home equity loan will allow you the flexibility to plan ahead for your other living expenses needs. The home loan carries a much lower interest rate than most credit cards and other loans. And any interest you pay can be tax deductible. So using your home equity loan to pay off your high interest rate debts like credit card (over 12% interest rate) will leave you with a balance of high income (after deducting the monthly home equity loan payment) to budget for other needs. such as sending your kids to college, financing a new car, etc.
How much can you save?
This depends on your income bracket and APR. But after deducting all qualified interest payments from your taxes, your effective APR will be significantly reduced. By comparing this lower interest rate to the interest rates on your car loan, credit cards, and other installment loans that don’t qualify for the tax deduction, you can see why it’s a smart way to to consolidate debt with a home equity loan.
Summary
Home loan is the best method to consolidate your high interest debts; it carries a low interest rate, tax deductible and love from the lenders as the secured loan to their borrowers. Home equity loan debt consolidation gives you the most flexibility to plan ahead.
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