Debt Help Station - Student Loan Debt

Debt Loan Tips

Don't close out all your credit cards. Keep some unused credit cards available from companies that you've had long relationships with to help boost your credit score.

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Home Equity Loans

If your financial situation consists of having outstanding personal loans, credit card debt, auto loans, or other secured debt, you might consider taking out a home equity loan to pay all these debts back with only one monthly payment. This works only if you can secure a lower interest rate than what you are currently using to pay your debts back with. If you can get the amount of money you need combined with the right interest rate, a home equity debt consolidation loan will save you money over time. After applying for a home equity loan and finding out that you can`t get a lower interest rate you could consider other options. Be sure to shop around for the best rates available when making decisions about loans. Check with your local bank, credit union, and mortgage brokers to get the lowest closing costs and interest rates possible.

The Pros and Cons

Perhaps the most obvious advantage of a home equity loan is that the loan amount can be used however you wish-whether it's for alleviating debt, funding an emergency or getting cash for college, a vacation or home renovation.

Another advantage is that the interest (on loan amounts up to $100,000) may be tax-deductible. However, keep in mind that the tax-deductible portion is based on a percentage, so if you're in a higher income bracket it may amount to nearly nothing.

The primary disadvantage of home equity loans is that they are similar to an additional mortgage on your home; if you can't make the payments, it puts your home at risk for foreclosure.

Home equity loans are also risky decisions for people facing career changes; if your income changes for the worse, your home will be at risk. Likewise, if your home's value drops, you might end up owing more on your property than it's worth-bad news if you need to sell the house later.

Are Home Equity Loans Right For You?

When deciding whether or not a home equity loan is the right decision for you, consider your short- and long-term goals. Home equity loans are good options for those looking to borrow a lump sum amount and reap long-term rewards-such as a major home renovation or the consolidation of high interest rate credit cards.