Rolling credit card debt into a home equity loan trades unsecured debt for secured debt — miss payments and you risk foreclosure, not just a credit-score hit. In exchange, you typically get a lower rate and a longer term than the debt you're paying off.
Advantages of using home equity loans or HELOCs to pay off debts include fewer bills to track and lower monthly payments compared to credit card minimums.
Get quotes from at least three lenders and have a repayment plan before you consolidate this way — Bankrate's research shows most borrowers who skip that step overpay.
Moving credit card debt into a home equity loan changes what kind of debt it is. Credit card debt is unsecured: miss payments and the issuer can sue you or send you to collections, but it can't take your house. A home equity loan or HELOC is secured by your home, so missed payments can lead to foreclosure. That's the trade you're making, and it only pays off under specific conditions.
The upside of converting your higher-interest debt into a home equity loan? Home equity rates average under 8%, whereas many credit cards are close to 20%. That gap can be real money back in your pocket — but only if you qualify for a rate near the average, you've already fixed whatever caused the balances, and you understand what's now on the line if you fall behind.
#home
Advantages of using home equity loans or HELOCs to pay off debts include fewer bills to track and lower monthly payments compared to credit card minimums.
Get quotes from at least three lenders and have a repayment plan before you consolidate this way — Bankrate's research shows most borrowers who skip that step overpay.
Moving credit card debt into a home equity loan changes what kind of debt it is. Credit card debt is unsecured: miss payments and the issuer can sue you or send you to collections, but it can't take your house. A home equity loan or HELOC is secured by your home, so missed payments can lead to foreclosure. That's the trade you're making, and it only pays off under specific conditions.
The upside of converting your higher-interest debt into a home equity loan? Home equity rates average under 8%, whereas many credit cards are close to 20%. That gap can be real money back in your pocket — but only if you qualify for a rate near the average, you've already fixed whatever caused the balances, and you understand what's now on the line if you fall behind.
#home
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