Accessing Home Equity for Debt Consolidation

By Karen Lawson
Local Lender Columnist
Jul 2, 2007
Are you stretching your paychecks to make ends meet? Increasing costs of household goods and services can lead to high credit card balances. If you're carrying high interest rate credit card debt, consider mortgage financing that can help you improve your financial situation by reducing interest rates, fees, and extra charges.

Debt Consolidation 101

Available solutions can include refinancing your mortgage or taking out a home equity loan. The amount of cash you can pull from your home is largely dependent on how much equity you have. You can estimate your home equity by using free online home value calculators, but a mortgage lender will require a formal appraisal to determine your home's value and available equity. A local real estate professional can also advise you of Colorado market trends, which can assist in deciding how much you can reasonably borrow against your home equity.

If there is insufficient equity for you to retire all of your unsecured debt, you'll want to prioritize which bills to pay. Generally, accounts with the highest Annual Percentage Rate (APR) should be paid first. The APR represents how much an account costs in finance and other charges on a yearly basis, expressed as an interest rate percentage. For credit cards, the APR can include interest paid, late fees, annual fees, and other charges. Make a list of your accounts in descending order, with the highest APR appearing first. The high interest rates and added costs of consumer debt is what can make it difficult to pay off credit card accounts.

If you're feeling overwhelmed, you can contact a reputable non-profit credit counseling agency for help in setting up a debt consolidation plan and cash budget.

About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds a Master's degree in English from the University of Nevada, Reno.