There comes a time in everyone's life when they decide to pay off their bills and get rid of the mounting debt that has piled up for years. In many cases a home equity loan is the perfect way to consolidate your credit card debt and make a clean break. Of course there are a few things to know about debt consolidation with a home equity loan, but if you have been paying your monthly mortgage payments then you are sure to have some equity built up in your home.
"There are typically two types of ways to borrow against your property," reveal the website homeequityhelp.net. "There is the standard term (or" closed-end ") or lines of credit (or" HELOC "), which allow you to borrow again and again." Additionally, there is a third type and that is called the reverse mortgage, this is for the homeowner who already completely owns their home.
With mounting interest rates on credit cards many people are choosing to take a home equity loan, which simply speaking is the percentage of your home and the difference between the value of your home at the time the loan is given and what you still need to pay off in the future.
There are other advantages to taking out a second mortgage such as possible tax fees and in some cases you can borrow money on a revolving basis with lower payments. Beside paying off large credit card debts many people also choose to pay off cars, student loans, medical bills or home improvement projects.
Banks and mortgage companies look at lending money for home equity loans favorably because most people do not want to lose their home by default. That said, the borrower can also set up a payment schedule over a period of time (usually from five to 20 years), which means scheduled monthly payments that confirm with what you can actually pay. If you do decide to consolidate your debt then the first question is to determine how much equity you have in your home using the Fair Market Value. From there just talk to a mortgage broker and remember that the money will be advanced to you quickly and the rate will not go up or down during the repayment period of the loan.