Cash Out the Equity in Your Home
All too often people find themselves swimming deep in debt with no way out. But for a home owner, that doesn't have to be the case. Did you know that if you have accrued equity in your home, you could have a loan within just a few days that will allow you to pay off any debt from credit cards, medical expenses, or anything else that may have happened in your life?
The Benefits of a Home Equity Loan
These loans actually require you have only the amount of equity in your home that you need to borrow to pay off your bills, in order to get the loan. And many lenders will even arrange for payment to be made to your creditors first. Once the payment to your creditors has been made out of the loan, you can opt to have the remaining balance either credited to your bank account, or applied to the balance of the loan.
Remember, each payment you make in turn builds more equity in your home. This is important if you have taken out a loan to pay off debts, because now your home is being used as collateral. If you miss too many payments, you run the risk of losing your home to the highest bidder.
This tends to be an especial problem for some people, who are anxious to return to their old ways, and run up more credit card debt. If you are paying off your high-interest credit cards with the equity in your home. Try to stay away from credit cards until you have the new balance paid off - because now you won't have the equity in your home to fall back on for repayment.
How Does it Work?
The way the equity in your home is calculated, is by taking the current market value of your home, and subtracting the amount you have still owing on your original mortgage balance. The higher this number is, the more you will be able to borrow. The best example is: if your home currently appraises for $100,000, and you still owe $80,000 on your original mortgage, then the amount of equity in your home is $20,000. That is the amount you can borrow against.
Taking out a loan against the equity in your home is the best, and often quickest, way to get yourself out of debt with high interest credit card debt. Just be sure that you can repay the loan as quickly as possible, so that you can rebuild the equity in your home as soon as possible.
