Debt Consolidation, with Home Equity Loans

Tip! The home equity line of credit, or HELOC, is like a bank account where you continue to write checks sponsored by the equity of your home. A HELOC does not have a fixed period of time wherein it will be paid off, because you can continue to borrow against it, just like to a credit card.

Debt consolidation is a way of increasing your monthly cash flow by combining all your high interest payments into a low interest and easily manageable home equity loan. The process is explained in the example.

Lets look at this example:

Your credit card loan is $15000 at 18% interest

Your car loan is $18,000 at 10% interest

Your student loan $21,000 at 8% interest

You plan on paying all these off in five years. Assuming interest rates don't change:

You make a monthly payment of principal of $250 and $45 in interest on your credit card loan. You pay $295 a month.

You make a monthly payment of principal of $300 and $30 in interest on your car loan. You pay $330 a month.

You make a monthly payment of principal of $350 and $28 in interest on your student loan. You pay $378 a month.

After five years of repaying these loans you would have paid $54,000 in principal and $32,400 in interest.

YOUR LENDERS HAVE JUST MADE AN ABSOLUTE KILLING OFF YOU!

Now, lets look at how we can save money consolidating your bills using a home equity loan.

Take out a home equity loan for $54,000 you plan to pay off in five years.

Receive the lump sum of money and pay off all your creditors.

After five years have your loan fully paid off only paying $13,500 in interest.

YOU JUST SAVED $18,900!

How does this work so well?

Home equity loans have extremely low interest rates, usually around 5%! If you put all your bills into one home equity loan, you will make regular low interest payments on what you owe.

This may be considered a double edge sword, but because you use your house as the security to finance the loan, if you cannot make the payments you may loose your house to the creditor. However, this is a very good incentive to pay your bills!

Good debt, Bad debt:

It is important to use debt consolidation to reduce bad debt instead of good debt. Good debt is defined debt that is owed on the purchase of an asset. Bad debt is defined as debt that is owed on the purchase of a liability.

Learn how to increase your quality of life on http://www.use-your-equity.com with the power of home equity loans. Article by John Whiteside!

Home Equity News:

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Home equity loans drying up for some - Personal finance- msnbc.com
Some homeowners are finding that even with great credit and 20 percent or more home equity, getting a line of credit on that equity can be difficult or impossible.
Equity in Americans? homes falls to historic low - Mortgage Mess ...
The equity Americans have in their most important asset ? their homes ? has dropped to its lowest level since the end of World War II.
Use of home equity hits a four-year low - Real estate- msnbc.com
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Morgan Stanley to freeze home-equity lines - Mortgage Mess- msnbc.com
Morgan Stanley told thousands of clients this week that they will not be allowed to withdraw money on their home-equity credit lines, according to a news report.
Late payments for home equity loans rise - Real estate- msnbc.com
Late payments on home equity loans climbed to a 1½-year high in the opening quarter of this year, while delinquencies on credit card bills fell, painting a mixed picture of how ...
Late payments rise on home-equity loans - Stocks & economy- msnbc.com
Late payments on certain auto and home equity loans climbed in the final quarter of last year, while delinquencies on credit card bills largely held steady, suggesting some U.S ...
BofA tackling debt worries by cutting home-equity lines - Top Stories ...
Bank of America Corp. is tightening up its home-equity lending business, turning down applications and turning off credit lines in struggling housing markets.
Should I get a home equity credit line? - Answer desk- msnbc.com
Free money In this week's video Answer Desk, msnbc.com's John W. Schoen has some advice on how to avoid giving the government more of your money than you need to.
Morgan Stanley to freeze home-equity lines - Today Technology & Money ...
Morgan Stanley told thousands of clients this week that they will not be allowed to withdraw money on their home-equity credit lines, according to a news report. ... Morgan Stanley ...
The New Yorker: When owning isn?t better - The New Yorker- msnbc.com
The housing boom undoubtedly makes lots of first-time home buyers happy. Unfortunately, it may end up prolonging the current downturn. By The New Yorker's James Surowiecki.

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