Home equity loans are home mortgages used for home improvement or debt consolidation. Unlike your unsecured debt, such as credit cards, a home equity loan has a low, fixed interest rate. A fixed interest rate means that your interest rate will not change during the life of the loan. So instead of credit card interest rates of 14% to 29.9%, you could be paying 6.31% average interest rate* on a home equity loan. Plus, the interest you pay is tax deductable.
The difference in payments & interest paid on credit card debt vs. a home equity loan.
CreditGUARD of America certified credit counselors will examine your debt problems and determine if a home equity loan would best fit your financial situation. Before you can consider using a home equity loan for debt consolidation, you must:
- Own Your Home
- Have more than $10,000 in Unsecured Debt
- Have sufficient Home Equity
If you don’t meet those basic qualifications, our certified credit counselors can look at other ways of consolidating debt for you.
It’s important to remember that a home equity loan doesn’t erase your credit card debt. You’re only consolidating those debts to a lower interest rate, so you should pay back your home equity loan as soon as possible. While a person with good credit can get a home equity loan for up to 125% more than the value of the home, you should only borrow as much as you need. Otherwise you run the risk of creating an even bigger debt than you can handle.
Because you’re using your home as collateral (to guarantee the home equity loan), it’s important not to be late or default on your loan. If you miss more than two loan payments, you run the risk of losing your home. Before getting a home equity loan, speak to one of the certified credit counselors at CreditGUARD of America to be certain this is the best financial solution for you.
Contact us online or call CreditGUARD of America at 1-800-500-6489. Certified credit counselors are available Monday through Thursday 8:00 a.m. to 12:00 midnight; Friday 8:00 a.m. to 11:30 p.m.; Saturday 10:00 a.m. to 6:00 p.m. Eastern Time. For online service, 24/7, use the Credit Card Debt Analyzer to calculate your estimated interest and payment savings available, through our debt management program.
*Interest rates calculated by Bankrate.com on 1/29/04
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