Consolidate Your Debt Using a HELOC Loan
Last month we talked about ways to determine if or when a home equity line of credit or HELOC loan is the right kind of investment to help you reach our financial goals. This month we want to provide insights on how you can utilize your HELOC loan to consolidate debt and make more manageable loan payments.
To recap; a home equity line of credit or HELOC, is a loan in which the lender agrees to lend a maximum amount within an agreed period, called a term, where the collateral is the borrower’s equity in his/her house. HELOC loans are often referred to as a second mortgage.
Consolidating Your Loans
Consolidating multiple lines of high-interest credit loans under a single HELOC loan can significantly reduce your monthly interest costs. This compilation of payments can also help you manage your personal billing cycle and reduce your chances of missing a payment.
According to Cait Klein of NerdWallet, “Once all your debt is under one umbrella, the break that you get in interest rates could help you begin to chip away at the principal even more. The interest rate with a HELOC generally varies, so if your income is unstable, make sure you could handle bigger payments if interest rates should rise.”
Keep in Mind
HELOC loans can be a great way to help you manage your debt, however applying for a HELOC loan comes with fees and costs similar to that of your original mortgage. Charges could amount to several hundred dollars through an application fee, appraisal, title search and attorney fees. So before you apply, contact one of our senior member representatives and they can help you navigate the estimated costs and provide current rate information.