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Almost all Americans have some sort of high interest debt that is costing them too much money. Homeowners have the option of utilizing the equity of their home by applying for a low interest home equity loan or a cash-out refinancing. You are not eliminating your debt when you use the equity from your home to settle your high interest bills, you are simple relocating it. You can learn more about the difference between equity loans and cash-out refinancing.

Your monthly debt payments will be lower with any type of home equity loan. These lower payments are deceiving, and are not as beneficial as you think. You will end up paying more in the long run because you are now stretching out your payments over an extended period of time.

Just like with any bad habit, good behavior is hard to keep.
Old spending habits come back, resulting in the purchase of unnecessary items. All too often, the negative credit card debt cycle reoccurs. However, this time, the equity from your home is tapped out, leaving you with no 'easy fixes' for resolving your financial issues.

Home equity loans are not cheap!
Your home's equity is something that you should appreciate, conserve and not use up. Below are some facts about home equity loans you should know:

  -- Building home equity is a way to increase assets and supply you and your family with a strong feeling of security. When you start using your equity to pay your bills, you become poorer.
  -- Using too much of your home's equity will result in you having to pay PMI (private mortgage insurance).
  -- Credit card companies are not allowed to foreclose on your home if you do not pay your bills. However, a home equity loan is a secured loan, secured by your house. If you do not make your payments, your home can eventually be taken away from you by your lender. Learn how to avoid foreclosure.
  -- There are fees associated in the closing costs of home equity loans. This can result in you being in more debt. Also, some equity loans have prepayment penalties if you decide to pay-off your loan early.

You can learn more about the pros and cons of refinancing to consolidate debt.

You have other options:
There are other options for consolidating debt. We offer a debt consolidation program that will reduce your debts by as much as 60%. Once enrolled, we will negotiate with your creditors to reduce your interest rates and total obligations. You can learn more about our program here.

Comparing the differences between debt consolidation programs and debt consolidation loans is also a good idea.

You may also want to consider reading the do-it-yourself debt elimination section of our site.



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