Using Home Equity To Pay Off Personal Debts–Loan And Refinancing Options Be ... Red, White, and Blue Press

22.08.11

There have been homeowners looking at current factors in the housing market that may offer advantageous refinancing opportunities or even affordable home equity loans, as low mortgage rates have potentially offered more affordability to certain individuals, and this is where some homeowners have begun to consider using their home’s equity to pay off personal debts that may range from college loans to an automobile. Yet, many financial counselors often caution homeowners against using opportunities like cash-out refinancing or a home equity line of credit to pay off unsecured debts as this could potentially be problematic despite the fact that there are conditions present that may make a homeowner’s debt situation somewhat more affordable.

Understandably, homeowners feel that if they can refinance for a much lower rate on their home or take out a home equity line of credit with one of these low rates currently available, they may stand to find themselves in a better position when all is said and done as many homeowners feel that consolidating debt onto their mortgage is essentially attaching these obligations to a much lower interest rate than they previously have had on some personal debts like a personal loan or credit card. Yet, this is where homeowners must make sure that they sit down and calculate not only the total costs that may come as a result of either refinancing or taking out a HELOC, but what the overall costs will be when all of these debts have been erased.

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