Credit card debt, student loans, medical debt, and tax debt can be eliminated by using the equity in your home.
Why is this smart?
1) Pay of those credit cards that have higher interest rates - compare your current credit
card interest rate with what you can get
2) Reduce your interest rate on any other debt you have
3) Consolidate your debt to one monthly payment
4) Turn your interest to becoming tax deductible
- There are a three ways you can access the equity in your home to consolidate your debt:
- A "cash-out" refinance -- when you refinance to get cash out, you're refinancing your mortgage to a loan amount more than you currently owe and taking the difference in cash.Â Depending on your current interest rate, you may also be able to lower your monthly payment and get cash to pay off other debt at the same time.
- A home equity loan - a home equity loan is another loan on your home that taps into your equity. Commonly referred to as a "second mortgage," a home equity loan allows you to turn your equity into cash without refinancing your first mortgage---and usually in less time than it would take to refinance your first mortgage.
- A home equity line of credit - A home equity line of credit is very 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. You can get a home equity line of credit in as little as ten days.
- Home Equity Line of Credit - A home equity line of credit is very 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. You can get a home equity line of credit in as little as ten days. When you use the equity in your home to consolidate debt, consider cutting up your credit cards and keeping one for emergencies only. And if you increase your monthly cash flow by consolidating debt, think about using the extra money you now have to save or invest for retirement or to pay down your other debt faster