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For most people in their late 20s and 30s, debt is a huge menace. And this debt could be coming from different directions as well. Credit card debt, student loans, and car payments combine to demoralize you and to help spell out the notion that your debt woes are here to stay forever.
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Using a Home Equity Loan to Consolidate Bills For most people in their late 20s and 30s, debt is a huge menace. And this debt could be coming from different directions as well. Credit card debt, student loans, and car payments combine to demoralize you and to help spell out the notion that your debt woes are here to stay forever. Debt is the biggest reason why many people have no savings. Of course, no one wants to be debt-ridden, so it seems wiser to pay off loans first rather than save for retirement. Debt is also the reason why many people choose to work post retirement. Paying off loans turns out to be more expensive than what most people tend to think, and the years don't pass soon enough. There's a smart option to consolidate all your bills into one monthly payment, and that's by using a home equity loan. If you own a house and have considerable equity built up in it, you could be eligible for a home equity loan, which is often used to pay off high- interest debts. A home equity loan usually has a lower interest rate than other types of loans, helping you get out of debt faster. What is a home equity loan? If you are homeowner, a home equity loan will allow you to borrow money and use the equity in your property as collateral. Home equity is calculated by taking the current market value of the house and subtracting the remaining mortgage payments from it. You can build home equity by making monthly mortgage payments towards the home loan. Appreciation of the property's market value also creates equity. When you take a home equity loan, you are lent an amount close to your equity, usually through a one-time lump-sum payment or a home equity line of credit (HELOC), which works like a credit card. A home equity loan is usually paid off in fixed monthly amounts like a regular loan, whereas a HELOC requires you to pay off the borrowed money on the credit line with interest. Pros and cons of a home equity loan While home equity loans have become quite popularin recent times for a number of reasons, there are also a few downsides to it.
