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
In order to be eligible for a home equity loan, you only need to have built up equity in your home that is equal or greater to the amount of money you wish to borrow. Loaning agencies often work with you to help eliminate your debt quickly. You can arrange for them to pay off your creditors before giving you any of the money from your home equity loan. Afterwards, the excess money can be deposited into one of your bank accounts or immediately credited against the total balance of your 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.
Individuals who have had repeated problems with credit card debt need to be extremely careful that they do not get back into even more debt. You will not have your home equity to fall back on if you rack up more debt. If you have paid off your credit card debt with a home equity loan, do not apply for more credit cards until your loan is paid off.
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.
Author: William BlakeThis author has published 28 articles so far.