Using Home Equity Loans to Clear Away Credit Card Debt

By using home equity credit card debt can be cleared away and taken control of. Credit cards have gotten many people in trouble financially over the years. Many of them get in over their heads and the high credit card interest rates make sure that they never get out. If you have credit card balances, it should be one of your highest priorities to eliminate them. One way to do this is through the use of a home equity loan. If you own a home, you can parlay your home equity into getting rid of your cards. Here are a few things to consider with the process.

Advantages

Using your home equity to get rid of credit card debt presents several advantages. If you have access to your home equity, it would make a lot of sense to use it on your credit cards. Here are a few reasons why you should consider it. 

  • Lower interest rate- With a home equity loan, you will be reducing the amount of interest that you pay on the money greatly. This can save you thousands of dollars in finance charges and help you out in the long run. 

  • Lower payment- When you get rid of your credit cards with a home equity loan, you will be making a much smaller monthly payment. With credit cards you pay an unusually high rate of interest. When you use a home equity loan, you pay lower interest and the loan is amortized over a longer period of time. Therefore, your monthly payment will be greatly reduced from what you were used to with credit cards.

  • Fixed payment- Another advantage of using home equity loans is that you can get a fixed monthly payment. It will not fluctuate like it can with a credit card. When you have credit cards, the APR can change at any time. With a fixed rate loan, it will be the same. This makes it much easier to budget for on a monthly basis. 

  • Tax savings- When you use a home equity loan, you gain a major tax advantage over credit cards. All of the interest that you pay on a home equity loan is tax deductible. This means that you will be able to lower your taxable income at the end of the year and save yourself some taxes. You will either pay less or get a bigger refund back.

The Process

The process of getting a home equity loan to eliminate your credit cards is actually quite simple. There are a number of home equity lenders out there that offer different loan products. The application process is very easy and it usually only takes a few minutes. They will verify everything on your application and you can usually receive the money within a few weeks. You then take the money and pay off your credit cards. From there, you can start making your lower monthly payment to the home equity lender for the next several years. 

 

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