Debt consolidating home equity finance

20-May-2020 10:24

debt consolidating home equity finance-82

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Did you know that as a homeowner, you’re in a unique borrowing position?

With the right approvals, you can borrow against the equity of your home with a home equity loan.

The Loan to Value ratio (mortgage value divided by property value) should not exceed 80% (or 90% with mortgage default insurance).

Being approved for a home equity loan is not as difficult as you may think.

Fill in your outstanding loan amounts, credit card balances and other debt.

Then see what the monthly payment would be with a consolidated loan.

Home equity loans can be risky as a method of debt consolidation if you don’t have the discipline to use the money for its intended purpose and pay down the loan on time.

With proper budgeting, and a steady income, making each and every mortgage payment on time and in full certainly sounds doable.

There are two types of home equity loans: a fixed-rate, lump-sum option and a home equity line of credit, or HELOC, which acts like a credit card.

Learn more about each option and which may be best for your situation.

Check out Bankrate’s pre-qualification flow to get the best personal loan rate for you.

If you’re a homeowner with strong credit and financial discipline, tapping your home equity could be a good debt consolidation option for you.There are pros and cons to each option and, as always, you’ll want to shop around for financial products to ensure you’re getting the best rate and terms.