Use a Home Equity Debt Consolidation Loan for Streamlining Payments
Homeowners with high interest rate bills or other debt can use a home equity debt consolidation loan to streamline payments into one, lower-rate monthly payment. Here are some important points to consider:
- Add Up All Your Debt - Take the highest interest rate credit cards, tuition, car payments, medical expenses and other recurring debt and add it all up. Next to that, put down what your monthly payments are for each. This is how much comes out of your pocket each month and seriously depletes any available cash available to you.
- Determine Which Debt to Consolidate - You probably don't need to include every monthly obligation in your home equity debt consolidation loan - just the biggest ones and those with the highest interest rate (which may or may not be the same debts).
- Lock Away High Interest Rate Credit Cards - If you're applying for a home equity debt consolidation loan for the purpose of paying off/down your higher interest rate credit cards, it doesn't make any sense to go right back to using them. Lock them away in a secure place and avoid using them. Remember, you're going to be paying every month in a home equity loan for quite some time. You don't want to fall into the same financial quagmire again.
- Pay down other debt - If you have any remaining money in your home equity consolidation loan, consider paying down other debt - or save it for emergencies.