Why A Home Equity Loan Is The Best Way To Consolidate Your Debts
Struggling with loads of debt is never fun or pleasant. Instead, it can make you feel overwhelmed and stressed out. If you want to find some relief for your debts, you might want to consider debt consolidation. One option for consolidating debts is through a home equity loan. In fact, a home equity loan is often the best option for debt consolidation, and here are some reasons this is true.
You Own the Equity in Your House
The first reason to consider using a home equity loan for debt consolidation is that you own the equity in your house. The equity you have is the portion of your house that you own, and you can calculate it by subtracting your loan balance from your home's value. For example, if your home value is $220,000 and you owe $120,000, you have $100,000 of equity. This $100,000 is the amount of your home that you own.
The Interest Rate Might be Lower
The next thing to know is that you can probably get a lower interest rate on a home equity loan than any other loan type. The interest rate you pay on your debt greatly affects several things. First, it affects you quickly you can repay the money. Secondly, it affects how much you spend paying off your debt. A lower interest rate helps you save money.
You Can Have Lower Monthly Expenses
A lower interest rate also helps you have a lower monthly payment. Additionally, if you consolidate your debt, you will naturally have fewer payments each month. The result is that you can save money on your monthly budget by having a lower debt payment to make monthly.
You Might Be Able to Write Off the Interest
The final thing to know is that you might be able to write off the interest you pay on your home equity loan when tax time comes. Writing things off on your taxes helps you save money on your tax liability, and home mortgage interest is one of the few types of interest you can write off. You may want to ask your lender about this before assuming you can write off the interest you pay on a home equity loan, though.
Are you ready to learn more about consolidating your debt through a home equity loan? If so, contact a mortgage lender to find out if you qualify for a home equity loan or another type of loan.
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