Your Home Working for You: Debt Consolidation and Home Equity Loansby Emily Kerr
Loan Page Columnist
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If you're in the market to make a large purchase maybe finance an education or refinance your mortgage you might want to consider debt consolidation to improve your credit scores. One route to debt consolidation is a home equity loan.
Easy Math: Your Home's EquityThe equity in your home is the amount of your home that you own. The general formula for figuring out your equity is to subtract the amount you owe on your mortgage from the appraised value of your home. The difference between those two numbers is your equity the part you own and many lenders will loan up to 75 percent of that amount.
Debt Consolidation Knocks High Interest Credit CardsWith a loan of 75 percent of the equity in your home you could consolidate high interest credit card debt through a debt consolidation service. Instead of several bills at high rates, you'd only have to make one monthly payment. The debt consolidation service could also lower your interest rates and should eliminate late fees on your monthly payments. A home equity loan does mean that you've taken on more debt, but debt consolidation through a home equity loan may help you to pay off some debts altogether.
Accessing EquityA home equity loan takes money out of your home--money which you'd get in a lump sum if you sold the home today. The amount borrowed does have to be repaid with interest. Your home is the collateral for the loan, but getting out from under your debt with debt consolidation should give you great peace of mind.
About the AuthorEmily Kerr is a freelance writer with over 425 articles published. She writes about everything from new home construction to new home loans and everything in between.
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