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Are you feeling pinched
October 1, 2014 | Posted by: Kristi Mutka
How many debt payments do you make each month? You probably pay your mortgage, a couple of credit cards, a couple of store cards, a car payment, a boat payment and maybe some student loans. Those payments are all due at different types of the month and have variable terms. Some probably also carry interest rates of around 20 percent.
Over the years, you have probably built up a great deal of equity in your home. Lenders will allow you to tap into that equity through a HELOC, which stands for 'home equity line of credit.' A HELOC is a loan which you can take out as you need that is collateralized by your home's equity.
When you take out a home equity line of credit, your lender typically gives you a cheque book which you can use to borrow against your house. You simply write checks to all of your creditors and pay those debts off. Once you have eliminated those payments, all that you have to do is to make a single monthly payment to your home equity line of credit lender.
There are many advantages to using a home equity line of credit. You have the convenience of making a single payment to cover all of your debts. The home equity line of credit also has a set pay-off time, meaning that you can someday become debt-free. The biggest advantage of using a HELOC, though, is that it will save you a great deal of money on interest. While your various debts carry a range of interest rates, most home equity lines of credit carry rates that are quite low and within one or two percent of mortgage rates.
If you are looking to consolidate debt, you should look into taking out a home equity line of credit. It simplifies paying bills while saving you a great deal of money. Now is an excellent time to take advantage of today's low rates to consolidate your debt and improve your family's finances.