Consolidating mortgage arrears
First, there are little or no origination fees with a HELOC.HELOC also are usually set up as interest-only loans during the "draw" period when you can borrow money before starting to pay it back, often 10 years - which can be helpful if you're experiencing temporary financial problems.
A consolidation loan can reduce your monthly debt payments in two ways.You not only get one of the best interest rates available, but you can also stretch out your payments for 15-20 years or even longer, allowing you to minimize monthly payments.A home equity loan is a type of second mortgage that is secured by the equity (ownership) you have in your home.There are some situations though, where a HELOC might be a more attractive option.A HELOC sets a certain amount you can borrow, called a line of credit, and you can draw upon at any time and in any amounts you wish.First, you may be able to get a lower interest rate on your consolidation loan than you were paying on your various other debts.
With interest rates on credit cards often ranging from 12-18 percent, that can produce a real savings.
However, these cash advances can also get you into trouble, because they usually reset to a fairly high rate once the no-interest period expires - often 16 to 18 percent.
They also typically charge an up-front fee of several percent of the amount borrowed, so you need to take that into account as well. One of the best, and most popular ways to consolidate your debt is through a home equity loan.
Consolidating debt with a home equity loan could be a good option. You may have high interest credit cards, loans and mortgages. This is the practice of rolling all your debts into a single, monthly bill.
2014)When monthly bills get out of hand, debtors frequently look to debt consolidation.
However, you might be able to use a cash-out refinance to roll your other debts into your mortgage payment, as described below.