Consolidating home and personal loans

“It’s almost always going to be a better deal than the rates you’ll pay on credit cards,” Weinberg says of home equity products.The ability to lock in a lower rate not only saves money in the long term, but can also equate to a lower monthly payment and help you pay down the debt faster.Before you apply, we encourage you to carefully consider whether consolidating your existing debt is the right choice for you. Consolidating multiple loans means you'll have a single payment each month for that combined debt but it may not reduce or pay your debt off sooner. The good news is that home equity interest rates are still near historic lows.Assuming you have enough equity in your home, this avenue of debt consolidation could be a better and cheaper alternative to carrying high-interest debt.This enables lenders to offer much lower interest rates and more favorable terms than credit card companies, but it presents a greater risk: losing your home if you fail to repay the loan.While credit card companies and personal lenders can’t come after your home, a bank could foreclose on your home if you default on a HELOC or home equity loan.

Because the debt is secured against your property, home equity loans and HELOCs have significantly lower interest rates than credit cards.Your home’s equity is its current value minus the loan balance you still owe.Tapping too much of your equity is risky, and you could wind up underwater in your mortgage if market conditions turn.The average variable credit card interest rate was 17.87 percent as of late April, according to Bankrate data.Meanwhile, the average rate of a home equity loan was 5.9 percent and 6.75 percent on a ,000 HELOC.

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