Lower Credit Card Debt
There are many ways to lower credit card debt. In this article, we'll examine the ways your home can help pay off your debts, and whether or not it's right for you.
Home Equity Lines of Credit
If you have equity in your home, consider taking a HELOC to lower your credit card debt. There are two reasons why this may be your best bet: firstly, the interest rates on HELOCs are some of the cheapest money you'll find; and secondly, you can write off the interest when do your taxes (up to $100,000 at the time of writing). Remember that a HELOC is secured by your home, which may be taken if you fail to make the payments.
Home Equity Loan
Similar to a HELOC in that you are using your equity, a home equity loan will loan you a pre determined amount at a fixed or variable rate. If the rate is variable, have a long talk with the lender before you sign about how that rate can change. Some loans can jump higher than others over a given amount of time, and you need to understand the implications involved. If used correctly, you can easily lower credit card debt or eliminate it entirely.
Refinance Your Mortgage
If you still pay your mortgage you can refinance the mortgage at a lower rate and pay off your existing credit card debts. Like the preceeding options, money borrowed from your equity is some of the cheapest around, but make sure you can afford the new payments. If you currently have a fixed rate loan, consider refinancing to a loan that allows you to make interest only payments (hopefully lower than your current rate). This way, you can pay down your other debts first, and then resume paying down the principal.
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