Debt & Credit Information

Low-Interest Home Equity Loans

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Using low-interest home equity loans to pay off debt is not a new concept. It has been used for quite some time by people just like you and me who found themselves in a serious credit card debt crisis. Once all of their credit card balances were paid in full one by the way, they found themselves with a hefty sum of money owed in home equity loans in order to pay off their balances. While this trend has been occurring for over a decade, it is also important to note that over that same time frame, the overall amount of credit card debt that Americans owe has increased significantly.

Your house is an excellent source of collateral, and if the credit card companies were to take your home, you could possibly lose your home through foreclosure, and, worst case scenario, you would have a bankruptcy case filed against you. Even if you didn’t lose your home, what could you do? That is where a home equity loan comes into play.

Home Equity vs. Credit Card Debt

Your home provides a level of protection to the lender against any possible losses due to any unpaid credit card debt. The fact is, when it comes to having a revolving line of unsecured credit that you are not making payments on, the lender has very limited recourse against the borrower. In fact, if the cardholder were to stop making payments on one or all of their credit cards, the lender would likely forgive the debt and write it off.

In contrast, the home equity loan lender has the ability to take possession of the home and sell it in order to recover any of the outstanding payments. The problem with this is that most of the time, this becomes a high-risk situation for the borrower. If the borrower does not make payments on the home equity loan for any reason, the note holder has the ability to move to another state. Granted, this is a risk that the lenders are prepared to take.

Low-Interest Home Equity Loans

If you need some extra money or want to pay off some credit cards, you may want to check into a low-interest home equity loan. These types of loans typically provide a lump sum of money in the form of a discounted interest rate. After that term, or for the faced movement of the loan, an interest rate reverts to a regular variable rate.

Find yourself in a situation where you have accumulated substantial credit card debt that you have a hard time paying off. A low-rate home equity loan may be able to give you the money you need to pay down all of your outstanding credit card debts.

Credit Card Debt Consolidation

Another great option for somebody looking to get some extra money is credit card debt consolidation. There are several different companies that advertise that they can give you a lump sum of money by consolidating all of your credit card debt into one lump sum. Basically, what happens is you get a bank loan with your home as collateral.

Therefore, rather than having to pay different sets of interest on your credit cards, you now only have to worry about paying one lower monthly interest rate and paying off the debt simultaneously. Remember, this program is only available to those who own their own home and have equity in their home.

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