Home Equity Loan

Whats better in this economy, getting a home equity loan, or just refinancing. For debt consolidation only.?

Public Comments

1. In UK, the term 'home equity loan' COULD mean either a straight re-mortgage (best) OR a rip-off deal, usually aimed at the aged, whereby the loan interest is 'rolled-up' (and so you pay interest on top of interest) and the loan is only repaid when you sell the house (or die) .. The reason why it's often sold to the elderly is that in about 20 years the balance of the loan exceeds the value of the house .. at which point they want you out = so, that's only OK for them if you are going to be dead in 20 years ....
2. The problem with consolidating debt, is that after the consolidation, it is just to easy to get back into credit card debt again. As far as home equity vs refinancing, it is entirely dependent on the terms of each of the two loans. If you are current on your payments, you have a lot more leeway, if you are not, you will have trouble getting good terms for either type of loan. It may make more sense for you to get a, temporary, part time job to make some extra income and just use that to knock out the debt quicker, especially if the mortgage that you have now has a low interest rate. Try this: This plan works with any number of debts. Make a list of all of your debts with the interest rates, listing them in order from highest interest to lowest interest. Pay the minimum due on all of them and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on card #1 (the minimum payment and the extra payment) towards card #2. That will pay card #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example: To start : Card #1 (highest interest): minimum payment+ extra payment Card #2 (middle interest): minimum payment Card #3(lowest interest): minimum payment Card #1: paid off Card #2: minimum payment from Card #1+ Minimum payment from Card #2 +extra payment Card #3: minimum payment Card #1: paid off Card #2: paid off Card #3:Mimimum payment from card #1+ minimum payment from Card #2+ minimum payment from Card #3+ extra payment. That way, you will get them all paid off, on time, and pay the least interest. This works no matter how many different debts you may have.
3. It is extremely dangerous to load your home with extra debt.  You already have difficulty in paying your bills and to put your home in jeopardy is not wise.  That is why so many foreclosures are occurring.  But if this is the only way then a home equity with a shorter time frame, this way all your extra payments are not going for interest. and you will be debt free quicker.