Home Equity

Home Equity Loan Consolidation and Debt Relief

Home equity loans can be used to consolidate credit card debt, avoid bankruptcy, and pay off variable loans. Many Americans are locking into a fixed-rate home equity loan to refinance their lines of credit and pay off debt. "According to loan officer, Andrew Christie, consolidating credit card debt into a home equity loan can help salvage your credit score."

Select the right finance solution. There are several types of second mortgages. The most popular today is the fixed rate home equity loans that offer a lump sum loan on which you make installment payments over a specified period of time. The other popular 2nd mortgage is the Home equity lines of credit which are adjustable rate loans that offer revolving credit lines but the interest rates do rise.

Compare the interest rates for 2nd loan options and consider the simple interest and revolving loans. The interest rate you qualify will result primarily based on your credit score: If you have an high score of 700 or above, you should be able to win a home-equity line of credit for half a point below the prime rate, said. A good score above 700 will help you get an interest rate below the prime rate.

Another thing to remember is to compare home equity loan fees. In most cases you will be charged $3,000 to $5,000 for the "hard costs" of the loan." If you don't have to pay any fees, then you can be sure that the costs are factored into the interest rate. If you plan on keeping the loan for a long time, then it makes more sense to have a lower rate and pay the closing costs. If you plan on refinancing the 2nd mortgage in the next year, the less the closing costs you pay the better.