Debt Consolidation and Your Home Equity Loan RateBy Karen Lawson
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You keep paying, and your credit card balances never seem to decrease. A home equity loan can help you eliminate fees and charges, and also reduce the interest rates you're paying for consumer credit. Your home equity loan rate is not the only consideration when shopping for a debt consolidation loan. Here's why.
Debt Consolidation and Doing the MathYour credit card statements include the annual percentage rate, or APR, in each statement. This figure includes all fees, charges, and interest rate charges associated with each account on an annual basis. You may be surprised to find that the APR amount is higher than the interest rates you're currently paying. It's a good idea to make a list of your credit accounts, the balances, and APRs. This will give you an idea of how much you'll need for a home equity loan.
Home Equity Loans 101A standard home equity loan is typically an adjustable rate loan that is amortized over a specific number of months. It is a mortgage loan, which means the loan is secured by your home. As such, a home equity loan will reduce the amount of your home equity. You'll want to consider real estate market trends in your area to help you determine how much you want to borrow. Home equity loan products also have an APR statement. It's a good idea to understand how your home equity loan rate can adjust. Checking the APR on your home equity loan and comparing it to the APRs of your consumer debt can help you decide how to approach debt consolidation through home equity financing.
About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds an MA degree in English from the University of Nevada, Reno.
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