Mortgage Fearbuster 10

Posted by  on Apr 30, 2010

Q: I hate credit card debt, but am nervous about taking a home equity line of credit to pay it off. Should I be concerned, or just go for it?

A: The answer isn't a simple yes or no. If you have plenty of home equity, and want to consolidate credit card debt at a much lower rate than you're currently paying, a home equity loan can help. Ask yourself these questions: Can you resist getting back into credit card debt? Will you have enough home equity after taking out the home equity loan to avoid problems if your home value declines? Are you comfortable adding mortgage debt to eliminate unsecured credit card debt? If you can answer "yes" to these questions, a home equity loan may help. Get several home equity mortgage quotes to ensure getting the best rates. To compare mortgage rates, go here.

Q: I've always been tight with money, and now my honey and I are in a big fight. He wants to buy a new truck using a home equity line of credit. I don't want to mortgage our home for a vehicle. Can you help?

A: Car dealerships are in dire straits these days, and you may be able to get a vehicle loan at a lower rate than you can get on a home equity loan or line of credit. On the other hand, a home equity loan may offer tax benefits; check with your tax advisor. Compare mortgage rates for home equity loan with auto dealer quotes to assist in making your decision. In general, however, you should not finance short-term objects with long term debt. You could be paying on that 15 year home equity loan for ten years after that truck goes to the junkyard.


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