Use Your Home Equity to Consolidate Debt

Loan Consolidation = Lower Payments and a Tax Break

Consumers run up credit card debt without even knowing how they did it. Try and remember where your money was spent: a few dinners here, some clothes there. Combine that with interest and you're in over your head. A good solution is to get a clean break by rolling that debt into a home equity line of credit (HELOC).

Why use your home equity?

Many consumers don't know that you can use a home equity line of credit for anything, including debt consolidation. You can refinance your debt into a HELOC and get rid of your credit cards. Refinancing your debt into a HELOC doesn't increase your debt. It just moves your debt. You are shifting the debt from various credit cards to one lender at a lower interest rates with a fixed repayment schedule. You can even save hundreds of dollars a month because many times, your payment is only 1% of your balance. In addition to the convenience of consolidating payments and payment dates, you create a tax benefit for yourself, because in many cases, the interest is tax deductible.

The downsides to this strategy are that it leaves you with refreshed credit limits on the cards that you are carrying, and it puts your home at risk. The best strategy is to cut up your credit cards after consolidating your debt, so that there is not a temptation waiting in your wallet. Contact a Heritage Credit Union representative to discuss a payment schedule and your options with a home equity line of credit.