Eliminate High Interest Rate Debt with Home Equity Financing

By Karen Lawson
Local Lender Columnist
Sep 24, 2007
If you're tired of late fees, over-limit fees, and balances that never seem to decrease, it may be time to consider a home equity loan or line of credit. This type of financing can help you pay off high interest rate debt at a lower rate, while eliminating extra charges often associated with consumer credit accounts. Here are some tips for evaluating your situation and potential home equity financing options.

Comparing Interest Rates and Other Costs

An important thing to know about consumer credit is that you may be paying much more than accrued interest on your accounts. Each time you pay an annual membership fee, late fee, or other charge, this adds to the cost of credit. Home equity financing may provide a way to reduce the cost of consumer credit. Generally, homeowners can borrow against some of their home equity to get cash for paying off consumer debt. Your ability to get a home equity loan largely depends on how much home equity you have. Home equity is typically described as the difference between current home value and the amount owed on mortgage loans. If you have enough home equity, you may be able to get a home equity loan that costs less than your consumer debt. Washington real estate professionals can provide home value estimates more specific to your area. If you're considering getting a home equity financing, it's important to know that a home equity loan is a type of mortgage, which means that the loan is secured by your home. A financial advisor can help you select home equity financing that works for you.

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.